5 Questions with Developer Robert Weisz
John Jordan | December 17, 2020
As the region enters 2021 with the specter of possible further economic restrictions due to rising coronavirus hospitalizations and deaths, but with the hope of improving conditions now that COVID-19 vaccines are starting to be administered, Real Estate In-Depth turned to a well-known and longtime successful commercial investor—Robert Weisz—for some much-needed perspective.
Commercial real estate organizations, such as the Building Owners and Managers Association (BOMA) and the Hudson Gateway Association of Realtors’ Commercial Investment Division, have frequently turned to Weisz for his insights and prognostications concerning the suburban commercial markets, particularly during uncertain economic times.
Robert Weisz, a native of Montevideo, Uruguay, has made a name for himself in the New York metro region’s commercial real estate market for his talent for engaging in the acquisition, repositioning and/or redevelopment of outdated properties.
Weisz arrived in the United States in January 1977 and started a career in the furniture industry. In 1979, he purchased his first warehouse to house his furniture company; and by 1980, was intent on creating his own commercial real estate business, RPW Group. He has served as President and Chief Executive Officer of the firm, now based in Rye Brook, since its founding.
The son of a furniture maker, Weisz’ crowning achievement is likely the acquisition in 2004 and the later conversion of the former 625,000-square-foot General Foods/Kraft/Philip Morris property in Rye Brook (nicknamed by some as Westchester County’s “Taj Mahal”) from a single-tenant to a multi-tenant property. Recently, he embarked on the long-awaited mixed-use development project adjacent to his 1133 Westchester Ave. commercial property (a former IBM office building) in White Plains off I-287.
Weisz has been the recipient of numerous recognitions as well as receiving an Honorary Doctorate Degree of Commercial Science from Mercy College in 2014. He has also served as a member of the Board of Directors of Westchester County Association, Reaching U and the Inner-City Scholarship Fund of the Archdiocese of New York City.
Real Estate In-Depth: Your firm has been involved for decades acquiring and repositioning real estate assets? I would think your firm’s shining achievement was the repositioning of the former Philip Morris property at 800 Westchester Ave. in Rye Brook. If you agree, what attracted you to the property and explain how you saw what no one else did at the time in converting the former single-tenant property into a thriving multi-tenanted building?
Weisz: I will agree that was one of the most exciting, if not the most exciting repositioning we have done. And I would probably without being too modest, say it was the most exciting repositioning in Westchester County of any office building. The reason for that is 800 Westchester (Ave.) is a very unusual building. It’s a million square feet cover and has a great deal of non-rentable space and at the time we bought it, it was going to be very difficult to make it a multi-tenant building. It was always designed and used as a single-tenant building and worked as such for a long time. It was originally built for General Foods and then Philip Morris bought it and they had several of their different companies in the building. The main reason why we were excited was because it is a very unusual piece of architecture. Most people love it. Some people hate it, but it really makes a statement. At the time in 2004 when we purchased the building, what was happening at the time was there were not large multi-tenant buildings of that size. We had done a number of buildings (re-positionings) by then—20 or 30—but the average size was 100,000 square feet, 150,000 square feet. Two-hundred thousand square feet was a very large building. In 800 Westchester Ave. we have over 100,000 square feet of amenities—space that is not being rented. So, that can only be accomplished with a building of a substantial size like this.
In a nutshell our bet was that small companies would like to offer their staff the same treatment that Fortune 500 companies offer their employees. What I mean by that is to have a great cafeteria with a lot of selection, to have an executive dining room, a bank branch, a great fitness center—we have two squash courts—to have a beauty parlor, a sundry shop, a dry cleaner and a conference center with room for over 100 people. So, all these things were not offered in any multi-tenanted building at the time. I would think that 800 (Westchester Ave.) was probably the first one. The conclusion was when we did it, we rented the entire building in two years. So, obviously our bet was a good bet at the time.
Real Estate In-Depth: Prior to the pandemic, you were pretty bullish on the future of the Westchester County commercial real estate market. At a meeting in early 2020 you said, “I predict that the next five to 10 years are going to be the most successful period that Westchester has seen probably in the last 50 years.” With the onset of the coronavirus pandemic, how has the Westchester County market changed and has that altered your upbeat view of the market in the years ahead?
Weisz: Prior to the pandemic, New York City for obvious reasons, was the magnet of the Northeast, the country and probably the world. And the areas around New York City had been expanding, starting with Brooklyn. You remember Brooklyn was a dirty word and now Brooklyn symbolizes high rent, great quality of life, wonderful quality of apartments, retail, etc. That has been transported to Long Island City in Queens and has moved to the Bronx and in the last five to 10 years started to percolate into Westchester County—and has continued to do so in a very strong way.
So, with the Millennials now getting married and having children, we see the movement from the major cities to the suburbs and there is no better suburb than Westchester County around New York City. It has the best quality of life, best transportation, the best school system—not Long Island, not New Jersey, Westchester is number one for obvious reasons. When it comes to the quality of housing, the cost of a house, Westchester offers the absolute best. What was missing in Westchester and a problem was it was not allowing young families and single-people to live in the area because it did not have good, competitive rental apartments that people could afford and have a good quality of life. That has been changing. Westchester in the last few years has added several thousand units and in the next five to 10 years we are talking another 5,000 to 10,000 units.
With the onset of COVID-19, everything I just described has intensified dramatically. People who have never, ever stepped foot outside of New York City, they are now living in the suburbs. I talk to my adult children who tell me their friends who never had a driver’s license, they are buying cars because they are all moving to the suburbs. Is this going to be permanent? No, there is going to be a percentage that will be coming back (to the city). What I am describing, was happening already without COVID. The coronavirus just multiplied and intensified (those trends). Let me give you a very concrete example. A friend of mine lives in New York City and grew up in the suburbs. He decided to rent a house last summer (during the COVID crisis) in Westchester. The house he was looking at was a house no one would rent (prior to the pandemic) for $6,000 or $7,000 a month. He rented it last summer and he paid $27,000 a month because there was nothing available. Every house he tried to rent was rented before he had a chance to put an offer in. So, that tells you the intensity of the demand, which has been completely out of control, is going to stay intense, but won’t be out of control (going forward).
This is taking place in combination with all the businesses and companies that are setting foot in Westchester and the businesses in Westchester that are expanding and growing dramatically for a number of different reasons…
Real Estate In-Depth: While many New York City residents have at least temporarily left the city for the suburbs, the same cannot be said for businesses in the city. For years, commercial market reports predicted higher rents and large relocations from New York City and for the most part that didn’t happen. Why do you think Westchester has not benefitted nearly as much as some had predicted?
Weisz: The main reason for that is New York City was overbuilt long before everyone else. Outside of New York City, Westchester was the place that had this incredible amount of construction—30 million to 40 million square feet (of commercial office space) were built and then when companies started to change their practices—the typical corporate headquarters in the country used to be 1,000 to 2,000 people, then in the 70’s the companies decided to separate the back office and front office and kept their headquarters in the region, usually with an average of 100 to 150 people. Everything else became back office and went south to different regions where the cost of living was much lower. When that happened, we had a lot of what we called “see-through buildings” and buildings that became completely empty. We purchased probably a dozen of those that were former headquarters of different companies and the market completely crashed. Then in the early 2000s, it slowly started to come back.
Now, a number of things are happening at the same time. Most municipalities have changed their building codes and allowing high density housing where it was not allowed before… Editor’s Note: Weisz noted the changing skylines over the years in White Plains, New Rochelle and Yonkers and related that 3 million to 4 million square feet of outdated commercial office buildings have been converted to other uses.
By having more residential, affordable housing in the region, you can have a better workforce in the region and supply all these existing or expanding businesses in Westchester. There are also a number of new areas of business that were not prevalent in Westchester (previously)—Biotechnology for example. You have a company like Regeneron that employs thousands of people in Westchester and all of the companies it is related to as well. We have an explosion of medical needs and medical providers…
We believe that when the dust settles, there is going to be a slightly different approach where companies will look at the region rather than just the heart of New York City.
Editor’s Note: Weisz said that even though since the onset of the coronavirus, large companies have not relocated to Westchester County, RPW Group has signed 10 long-term lease deals since the pandemic began with New York City based companies that have averaged between 5,000 to 10,000 square feet.
Real Estate In-Depth: With changes in priorities by New York City renters in response to COVID-19, are you concerned that some city renters will forego moving to Westchester apartment buildings, thus depressing demand for new county multifamily product coming online?
Weisz: The reality is No. The (prospective) renters in Westchester are families with children that will be moving to the suburbs no matter what. You have the empty nesters that do not want to take care of the big homes anymore and I think that process was happening before and I don’t think it is going to stop now… We are just scratching the surface (on demand) with 5,000 units. There is a long way to go.
Real Estate In-Depth: You are moving forward with a partner on a long-awaited project at your 1133 Westchester Ave. property in White Plains. Can you explain what you have planned and when it might break ground?
Weisz: We started construction six months ago (on the mixed-use project at 1133 Westchester Ave.) right in the heart of the pandemic. This is a substantial project (in partnership with NRP Group of Cleveland) on 20 acres with 300 units in three buildings with a lot of ancillary buildings, a swimming pool, barbeques and a number of other amenities. We are ready to start pouring foundations on the first building and we did all the underground work already. So that is well on its way. We think that for the spring of 2022 we should have the first residents moving in.
We also have 10 acres on Webb Avenue in Purchase (with partner NRP Group) and we are looking to build 200 units. It is right off Exit 10 of I-287 that is right next to 800 Westchester Ave… We have made a presentation to the Planning Board of Harrison recently and we are working through the process.
Editor’s Note: Weisz estimated the development cost of the White Plains project at $100 million and the Harrison proposal at approximately $60 million.