By Roland Li
In May, Chelsea Piers announced the beginning of construction of its Connecticut facility, at the Campus at I-95 Exit 9 Stamford, a major deal that suggests the downturn is thawing in the suburban market.
Clay Fowler, founder, CEO and chairman of Spinnaker Real Estate Partners, which owns the property with Steven Wise Associates, LLC., had been eyeing it for years. The recession caused them to withdraw their bid, but around a year and a half ago, they acquired it and reached out to Chelsea Piers, and began discussing a major lease. With a deal reached last fall, around half of the 850,000 s/f facility has been leased. (Construction of the Chelsea Piers Connecticut will actually add around 100,000 s/f of new space to the original structure’s 711,000 s/f.)
Cushman & Wakefield is the exclusive agent for the remaining space.
The facility’s unique combination of office and industrial space makes it appropriate for a range of tenants. It was the former headquarters of Clairol, the hair and personal products division of Procter & Gamble, and has high ceilings and large spaces that formerly housed the company’s manufacturing lines.
“You have to have a fairly broad-minded attack and marketing approach,” said Fowler.
Fowler said potential tenants for the remaining space are diverse: facilities such as a bowling alley, health club, indoor kart racing, or physical therapy center are natural complements to Chelsea Piers’ athletic facilities. Film studios have also inquired about the space, in part because of Stamford’s low taxes for video productions.
Data centers could also take advantage of the facility’s many power sources, fiber optics infrastructure and heavy floor loads. Warehouses and large retailers could also use the large spaces, and schools could also use the space – there is already an environmental science school next to building.
Asking rents for the space are $10 to $15 per s/f.
It isn’t the first conversion that Spinnaker has undertaken: it also owns Norden Park in Norwalk, Conn., a 650,000 s/f industrial building that formerly housed military equipment.
“Most industrial properties in the area are being repurposed,” said Fowler.
Adaptive reuse of industrial is roughly a quarter of Spinnaker’s portfolio – the bulk is residential. Fowler describes his company as “community builders,” creating apartments along with street retail.
“We look to revive. We look to make places,” said Fowler. “We do not like doing stuff that’s in the middle of nowhere.”
Spinnaker’s portfolio includes the SoNo Lofts, a 45,000 s/f, mixed-use development with 34 condominiums and retail, and the Maritime, a 197-unit residential project, also with retail.
In addition to its Connecticut holdings, Spinnaker has a number of residential developments in Portland, Ore, including 3,000 units of housing on former rail yards. Fowler was attracted to the city after his sister moved there after college. Spinnaker is also working on a project next to the St. Louis Rams stadium in Missouri.
The local commercial and residential markets continue to have challenges, although there are positive indicators.
“Even in the New York suburban area, the market is still spotty,” said Fowler.
The office market of Stamford is still dependent on the financial services and large companies, such as General Electric and Starwood Hotels. Some firms, such as UBS, have been reportedly seeking to move employees back into the city. The job market is relatively strong, said Fowler, but the retail is underserviced.
On the residential side, results are mixed.
“It’s coming back, but I wouldn’t say it’s roaring,” said Bill McGuinness, principal of Sun Homes, one of the developers of Palmer Hill, a residential complex in Stamford.
McGuinness partnered with Bob Dale of Buckingham Partners and equity investor: O’Connor Capital Partners, to build single-family townhouses and condos. Sales have increased in 2010, but continue to vary from month-to-month. The development has 93 of 195 units in contract. Construction is beginning on the third and final condo building, which expects to break ground in August.
Although prices held up, lack of sales deterred new development.
“It’s really not price, as much as pace,” said McGuinness. “That’s what really hurt the developers of new buildings.”
Condos at Palmer Hill range from 1,200 to 2,000 s/f and are priced at $500,000 $800,000. Townhouses range from 2,300 s/f to 3,500 s/f, ranging from $800,000 to $1.2 million.
For Fowler of Spinnaker, development has come full circle.
He worked under his father’s constructon company, which was involved in the construction of the former Clairol building, which he now owns. Spinnaker has partnered with the Related Companies, Daewoo, Greenfield Partners, and some of New York’s large real estate families in joint ventures.
The company has roughly 25 people in the northeast, 25 in the West Coast and five in St. Louis. It is named after Fowler’s passion for sailing, which he taught on Long Island. The developer has also drawn lessons in teamwork and leadership from sailing.
“It’s a lot easier to get to the other shore, when everyone in the boat knows where they’re rowing to,” he said.