Office properties have not done well during the pandemic, especially dated ones that lack the amenities and technology of recently constructed commercial buildings.
So the $24.5 million that Damianos Realty Group just spent to buy a half-empty, 37-year-old office building in Suffolk County won’t be the end of its investment in the asset, the firm told Newsday.
Damianos bought 150 Motor Parkway in Hauppauge, a 200,000-square-foot office building with a fitness center and cafe, from UA Properties.
The principal of Damianos, X. Cristofer Damianos, said the four-story building needs upgrades including modernized hallways, elevators, bathrooms and mechanical systems. The firm plans on bringing in higher-grade air filters and sanitizing stations as well as increasing the building’s air flow.
Its large vacancy was actually a selling point for Damianos, as it will make the renovations easier, the executive told Newsday.
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Tenants include the Ingerman Smith law firm, the Suffolk County Dental Society and the Association for a Better Long Island. The high vacancy of the building is attributable to its condition rather than the pandemic, Damianos said.
Damianos Realty Group owns 10 buildings totaling about 700,000 square feet in Smithtown, according to Newsday.
Among the properties in its portfolio is 100 Motor Parkway, right down the road from its latest purchase. Damianos Realty Group acquired that six-story office building from Briar Meads Capital in 2019 for $32 million. The firm planned tomake $10 million in renovations to the 210,000-square-foot building, including improved lobbies, hallways and bathrooms.
Shortly after that purchase, the firm’s principal, John Damianos, died suddenly at 67 years old. He served as a manager of property management and legal counsel for the third-generation, family-run firm, which was founded by the late Dr. Xenophon Damianos in 1968.
Some observers theorized that suburban offices would fare better than urban counterparts during the pandemic, but that hasn’t been the case on Long Island. Halfway through this year, Avison Young projected leasing volume in 2021 would fall 42 percent below the 20-year average. The vacancy rate in the second quarter was 9.4 percent.
[Newsday] — Holden Walter-Warner