Key Takeaways From HV Visionaries Conference

John Jordan | April 2018

POUGHKEEPSIE—The recent “Hudson Valley Visionaries: A Look into the Future of Commercial Real Estate” conference covered a gamut of groundbreaking topics and interesting and salient viewpoints from the expert panel.

The following are some further comments/issues raised by the real estate “visionaries.”

Developer Robert Weisz discussed some interesting trends in terms of tenant requirements, including a rather new concept—“the nap room,” which would offer space for workers to rest to deal with a long work day or to just provide some down time to foster creativity.

“One of the characteristics of the market now is high density,” he said, noting that in the past companies designed space for three or four employees for every 1,000 square feet. Today, they now seek to accommodate, five, six or more workers in that same 1,000-square-foot blueprint.

Weisz said the typical office space in his firm’s three-million-square-foot portfolio consists of open design with a few conference rooms and several enclosed offices. Building owners are finding it easier to lease vacant space now that office designs are becoming more standard, he noted.

Another emerging trend is that businesses are now seeking shorter-term leases, usually between three to five years to give themselves more flexibility. The conventional 10-year lease deal is no longer commonplace.

IBM’s Frank Cuevas said that today’s office design is now geared much more towards fostering collaborative workspaces than less expansive individual executive office suites that were prevalent in the past.

“If we designed something new today, it looks entirely different, feels entirely different (than what was designed in the past). I do feel the pendulum has swung a little bit too far in terms of companies going to an open plan.”

He said some companies’ decisions to go with an open space design were driven to lower costs and increase density. However, he added, “The reality is that is not the way people work, not entirely. Today, we really have different vignettes or settings where they would have living room settings, playroom settings and desk settings. All these different settings are ways in which people work depending on what they do for that role or what they are doing that particular day for that particular role.”

RM Friedland’s Sarah Jones-Maturo offered a frank view on the retail market in the Hudson Valley. She said that while conventional, bricks and mortar retail is struggling mightily, “experiential retail” is thriving in the Hudson Valley.

“Boutique fitness right now is a major craze,” she said. “We have done about five deals in the past 60 days with boutique fitness companies.” She said that while fitness retailers, as well as hair and nail salons are growing in the region, technology, apps or home service-related concerns could impact these niche industries in the future.

“What I see surviving and absolutely thriving is the food experience,” Jones-Maturo said, noting that there have been 25 food hall-related locations that have opened in Manhattan in the past three years and all have been successful. “I think the food experience is the future of retail,” she said.

In terms of the industrial market, Jones-Maturo said companies are looking for space throughout the region, noting that Jet.com recently signed a lease deal for a 250,000-square-foot warehouse in the Bronx. She said that the Hudson Valley could position itself in the future in some areas to develop new industrial space that would be attractive to e-commerce retailers, noting that much of the existing industrial product is not suitable for such users.

She said that in the lower Hudson Valley, new industrial development is not feasible as compared to other potential uses at this time.

“We are still not yet at a point, Westchester specifically, where the industrial numbers have exceeded the retail,” she said. “We were working with a developer recently on some land that they own and they were looking to build industrial because there is a great play for it, but the numbers just don’t pencil to do new construction when you are getting $20-a-square-foot max.”

John Jordan
Editor, Real Estate In-Depth