The opening of the Hutchinson Metro Center had a real impact on the borough, boosting its class A office space by 25 percent the day it opened.
Simone Development Companies, the power behind the $60 million project, transformed a market of about 2 million square feet of class A and B space to one with 2.5 million available square feet.
The development group financed the project itself to get it off the ground – outside financing only arrived after construction was underway. “We knew this market very, very well,” said Joe Simone, president of the New Rochelle developer. “And we decided to speculate.”
The metro center, located just off the Hutchinson River Parkway in the Pelham Bay section of the Bronx, was a former psychiatric center owned by New York State. The upscale, 460,000-square-foot complex was 55 to 60 percent occupied by late May, and there are plans to expand up to 1 million square feet. The site is less than a mile from four major medical centers, making it popular with health-related groups, including the Visiting Nurse Service of New York, which moved in after signing on as the center’s first tenant last summer.
The metro center is one of a handful of major commercial development projects in the Bronx in recent years that have expanded the borough’s office and retail markets. The Bronx’s push for residential housing is better documented, but now the office and retail market is starting to catch up.
A major sign of the new interest came in April, when the Related Companies bought out the lease to the Bronx Terminal Market, a weary 31-acre site near Yankee Stadium. A land-use lawyer for Related, Jesse Masyr, said Related is looking to add 1 million square feet of retail space to the site, possibly with a moderate-sized hotel. At $300 million, the redevelopment is going to be the most significant private development in the Bronx in more than half a century, Masyr said.
“It recognizes wealth in the Bronx that a lot of people have stereotyped not to be there,” he said.
Often, new commercial development in the Bronx has been mixed use, comprised of office and retail. That’s the case with the former Alexander’s building at Fordham Road and the Grand Concourse, which was acquired and redeveloped by Fordham Associates as a 300,000 square foot retail and office complex. Lower floors have stores like P.C. Richard’s and a Verizon cell phone store; offices for an HMO, the city’s child welfare agency and the City University of New York dot the upper floors. The building had its grand reopening in November 2002, and acquisition and redevelopment cost around $60 million.
“The building is full and I wish I had another 100,000 square feet because I would rent it out,” said Jim Houlihan, partner in Houlihan-Parnes/iCap, a 50 percent owner of the building. “I could rent another 200,000, another 300,000. I’m not bragging.”
Houlihan said the mix of office tenants for the Bronx is drawn from not-for-profit, government, health care and educational groups. Midtown law firms aren’t going to move to the Bronx, he said, but groups looking for more modest rents and blocks of space will. Class A or B office space in the Bronx can go for $25 to $30 per square foot, he said. At a prime location like Fordham Road and Grand Concourse, retail rents can be above $100 a square foot.
Steven Rodriguez, co-director of the Bronx Empowerment Zone, said the borough has placed a priority on residential development, but there’s room for commercial development as well. In the South Bronx, warehouses are being converted to mixed-use office and retail spaces, which helped create a new antique district in the Port Morris area.
One of the best things the borough has to offer is location, with Manhattan on one side, Westchester County on the other, and subways, bridges and highways throughout, Rodriguez said. “Basically, you could draw an X right through the Bronx, and in 10 minutes you could be anywhere in the metropolitan area,” he said.
For the Hutchinson Metro Center, its location meant a deep labor pool within a 30-minute commute. “We are a stone’s throw away from Manhattan,” Simone said.
Simone maintains he encountered little skepticism about moving to the Bronx or expanding inside the borough when he began marketing the space. “On the contrary, it’s been a plus,” he said.
Simone’s original site was 18.5 acres, but subsequent acquisitions when he began marketing the space increased it to 42.5 acres, one of the larger development spots in the city. It’s not zoned for residential, and Simone said that’s not what his company wanted anyway.
“We knew that if we built a complex that it would get absorbed.”