For Tony Fromer, who spent his childhood in Great Neck and watched his grandfather Jack Wexler develop office buildings in Lake Success, Huntington and Jericho, the family business is well cemented. Fromer, 55, oversees leasing for the We’re Group, one of the last private, family-run commercial real estate firms on Long Island — most of the others having sold their stakes or gone public.
The Jericho-based company, which builds, owns and manages office buildings in Nassau and Suffolk counties, has developed more than 10 million square feet of real estate over nearly 50 years. The We’re Group’s co-founders, Wexler (the We in We’re) and his brother-in-law Morton Rechler (the Re), began constructing their first large office park on the Island in the late 1960s.
The Rechler name has become a staple in the real estate industry. Several relatives on that side of Fromer’s extended family built successful companies of their own, including Rechler Equity Partners and the New York real estate giant RXR Realty.
Fromer graduated from the University of Pennsylvania in 1982 with a degree in economics and returned to Long Island that year to join the We’re Group as a leasing agent in Huntington. He is now one of several principals at the company, alongside his uncle Gary Wexler and several cousins on the Rechler side.
The father of two has signed major leases with Cablevision Systems Corporation and the regional physician group ProHealth in Jericho. He recently inked a 10-year deal with Publishers Clearing House to occupy 170,000 square feet there in 2017.
Q: How did the We’re Group come to be?
A: Long Island was really a family-driven real estate market back in the 1960s and ‘70s. There were a number of prominent families that built here and we were one of them. Morty Rechler, Willy Rechler and my grandfather Jack Wexler invented the folding aluminum chair, which they sold the patent for. They took that money and started buying real estate in Brooklyn and later ventured out to create the Lake Success Quadrangle in Long Island, which was one of the first suburban office complexes in the country. They bought a farm just outside of the city line in Nassau County and developed 1.1 million square feet over 11 buildings for office and R&D tenants. Their next big project was the Huntington Quad in Melville. They built both of those on spec, which no one would think of doing ever again.
Q: How big is the company’s office portfolio now?
A: About 3.5 million square feet. But we’ve also sold off property over time.
Q: How much of that space is leased?
A: Right now we’re at about 93 percent. Our tenant retention rate is very high because we’re very hands on. We not only build these buildings and do the leasing for the buildings, but we also manage them ourselves. We have our own architects, so we do the initial layouts for all of our tenants, and we’re the ones who go into the towns and villages to get the construction permits. We have our own construction managers and we have our own in-house engineers who do all of the HVAC and electrical planning and maintenance.
Q: Who are your longest-running tenants?
A: Currently Cablevision, which has 300,000 square feet, and ProHealth, which has 350,000 square feet. In Lake Success we still have some original tenants from the late 1960s. A couple of lawyers and accountants who my grandfather signed are still there.
3 Dakota Drive
Q: Are medical office leases a big part of the real estate business in Nassau County?
A: They are. We’ve actually taken the Lake Success Quad — 11 buildings that all started as traditional office and R&D flex space — and converted most of them to medical office space over the years. Out of those buildings, three are traditional office buildings and the rest are medical buildings.
Q: What’s driving that trend?
A: A lot of it has to do with proximity, since those buildings are located just over the Queens line near Northwell Health, the largest hospital employer in New York State. There’s also been an expansion of the medical community’s need for space to serve what is undoubtedly an aging population. At the same time hospitals have been buying up practices in order to have those practices feed patients back to the hospital for more serious care. We’re even getting an influx of city hospitals out here on Long Island.
Q: Canon U.S.A., which was an anchor tenant in Lake Success for decades, moved its headquarters to Melville in late 2013. What became of that space in Lake Success?
A: Canon came to us in the early 1970s at about 7,500 square feet and over time they grew to 370,000 square feet across three buildings. Eventually they outgrew us and built their own headquarters, and when they left us we had these three empty buildings. All of the buildings had to be gutted, since they hadn’t been touched since the ‘70s. ProHealth ended up taking one of them entirely. We’re converting another at 3 Dakota Drive into a new office building, which is just getting finished. I’ve signed 63 percent of that space to Progressive Insurance, Advantage Funding and the law firm Abrams Fensterman. We’re just starting construction on the last building that Canon occupied to convert it into a 60,000-square-foot medical building.
Q: Is that the largest repositioning project your firm is doing?
A: We’re also carving out new space in one of our Jericho Quad buildings for Publishers Clearing House. We signed a deal with them for 170,000 square feet last year, which was the second largest commercial lease on Long Island in 2015. Cablevision took 200 and 300 Jericho Quad in 2005 and 2006, respectively. After they took 300, they decided they didn’t want it and subleased the entire building out to other tenants. I renewed the vast majority of those tenants and the ones that are staying are State Farm Insurance, Aer Lingus and Darby Dental Supply. A few tenants will be leaving to get out of the way for Publishers Clearing House and then we’ll start work on their suite. They’re really going to have a building within a building.
Q: What were the asking rents on those new leases at 300 Jericho?
A: They were all in the $30-plus range per foot and all for 10 years or more. Before the building turns over we will be 95 percent rented.
Q: To what extent are your properties leveraged?
A: We’re well financed and have a low debt ratio. We like to keep our debt at 50 percent or less. In good times or bad, especially bad, it gives us a tremendous amount of flexibility in terms of deals that we can make. If you’re overleveraged, you can’t lease space for rents that won’t pay the debt.
Q: Does the We’re Group have long-term relationships with certain lenders?
A: We build big, so we generally don’t go to banks for our loans. We generally do long-term life insurance company loans. The life insurers like us and we like them. We’re stable and they’re stable.