The basic premise of commercial development is simple: Build something that will attract tenants.
The tricky part is dealing with unforeseen events — everything from national tariffs to local politics.
VentureOne, the Illinois-based developer of a $25 million spec warehouse completed in Bohemia early last year, apparently didn’t see this glitch coming: The Tesla body shop it lined up to lease the property is not allowed in the town’s industrial district, Newsday reported.
What is allowed? Medical offices, laboratories and banks, according to the newspaper.
It’s hard to imagine why an industrial district would allow pediatricians and banks but not a collision repair shop. VentureOne’s principals, Mark Goode and Roy Splansky, might be wondering the same thing.
That’s not the only anomaly in this story. Another is the tax-break policy of Islip Town’s Industrial Development Agency.
Three years ago, the IDA granted the 121,000-square-foot warehouse project $2.6 million in tax breaks, contingent upon its creation of 25 full-time jobs within two years of completion.
What’s odd is that last year, when the market for industrial space stalled after a pandemic-fueled hot streak, the IDA stopped giving warehouses tax benefits. It recently extended the moratorium through December.
Islip’s economic development policy appears to be backward. The whole point of targeted tax breaks is to enable projects that wouldn’t otherwise happen.
When internet shopping surged and Amazon supercharged demand for distribution centers, developers couldn’t build them fast enough. Many facilities were leased up before they even broke ground. They certainly did not need tax breaks.
Yet Islip’s IDA granted breaks when the sector was hot and suspended them when industrial properties needed help. Go figure.
Islip residents — Islippers? Islippians? — are not exactly tuned into this issue. At a public hearing for the 2950 Veterans Memorial Highway project in 2022, no one commented.
Viewers who tuned in for the livestream saw the IDA’s executive director read a statement, leave his desk, then return later to close the hearing. In between, they were entertained by 23 minutes of his empty chair:
VentureOne, which demolished an 85,000-square-foot building on the 10-acre site and put up the logistics center, will have to return the breaks it got for mortgage recording taxes, property taxes and state and local sales taxes if it doesn’t find a tenant that employs 25 full-timers by early next year.
Five Cushman & Wakefield brokers are on the prowl.
Beating the deadline is now looking dicey but not impossible. The industrial vacancy rate on Long Island ended the second quarter at 5.5 percent, Cushman & Wakefield reported. In 2022 it was about 2 percent. Rents have been flat since late 2023, and net absorption has plunged into negative territory:
The next potential tenant at VentureOne’s logistics center could negotiate for a good deal, but might want to first ask the town whether it actually allows any industrial uses in its industrial district.
What we’re thinking about: Should Brooklyn politicians have left more market-rate housing in the Brooklyn Marine Terminal project to avoid ending up with a $1.4 billion funding gap? Send your thoughts to eengquist@therealdeal.com.
A thing we’ve learned: Opendoor’s stock price sank from about $2.50 a year ago to as low as 51 cents in June. Apparently, its live Super Bowl ad didn’t work. Then in July, the iBuyer became a meme stock and its share price skyrocketed to $4.97. The hedge funder who triggered the frenzy says he’s not a meme stock player. Opendoor stock closed Monday at $2.34.
Elsewhere…
— New York is joining California and Michigan in a suit against the Trump administration to protect Supplemental Nutrition Assistance Program data, PIX11 reported. The USDA, in new guidance for state agencies, requested personal information, including immigration status, for applicants seeking SNAP benefits. New York Attorney General Letitia James described it as a sign that the administration plans to use SNAP data to further its mass deportation efforts.
— The Department of Probation is in chaos under Commissioner Juanita Holmes, according to The City. Morale has plummeted amid understaffing, top-level turnover and a leadership style shaped by Holmes’ years in the NYPD. The City Council held an oversight hearing today to discuss the situation. — Quinn Waller
Closing time
Residential: The top residential deal recorded Monday was $9.4 million for unit 16F at 50 West 66th Street. The Upper West side apartment is new construction and 2,900 square feet. Douglas Elliman’s Janice Chang has the listing.
Commercial: The top commercial deal recorded was $11 million for 350-352 West 38th Street in the Garment District. The office building is six stories with nearly 30,000 square feet of gross floor area.
New to the Market: The highest price for a residential property hitting the market was $8 million for 33 West Ninth Street. The Greenwich Village townhome is 5,500 square feet. Serhant’s Nicole Palermo and Chris Gillis have the listing.
Breaking Ground: The largest new building application filed was for a proposed 22,478-square-foot, five-story residential building with 26 dwelling units at 151 Hawthorne Street in Brooklyn. Oleg Rudister of Engineering Professional Services is the applicant of record.
— Joseph Jungermann
