Would-be owners of Woodbury office building seek 20 years of tax breaks for $32 million project
Developers are seeking tax breaks to renovate 1000 Woodbury Rd. Credit: Debbie Egan-Chin
The prospective owners of a Woodbury office building that’s nearly 40% vacant due to the popularity of remote work are seeking 20 years of tax breaks to turn around the property, officials said.
Investors Ric Clark and Dennis Friedrich plan to purchase 1000 Woodbury Rd. for $23.5 million from commercial real estate giant RXR. The pair then would spend $8 million on renovations to about half of the 288,000-square-foot building.
"This building from an interior standpoint is unfortunately very dated," said Friedrich, founding principal of TKF Real Estate Investment LLC in Manhattan. He added that much of the office space hasn’t been improved in 20 years.
"But this is a great location and I think coming in … with some fresh ideas we can get back to" 85%-95% occupancy in three years, Friedrich told the Nassau County Industrial Development Agency last week.
The county’s eastern neighborhoods were home to 9.9 million square feet of offices as of March 31, with a vacancy rate of 20.2%, or 342,462 square feet. Asking rents averaged $28.90 per square foot in the January-March period, according to a research report from the Colliers real estate firm.
Friedrich, who once led Brookfield Properties in Manhattan, and Clark, of Burnside Investments LLC, would make improvements to the Woodbury Road office complex, including upgrades to the plumbing system, to attract doctors’ offices and other medical tenants. Friedrich noted that the area already is home to many health care facilities.
The building has multiple tenants with the most space — 65,000 square feet — rented to Petro Inc., a provider of propane, heating oil and HVAC services, according to the application for IDA tax breaks.
The investors have requested a sales-tax exemption of up to $434,700 on the purchase of construction materials, equipment and furnishings plus up to $134,625 off the mortgage-recording tax. They also have asked for 20 years of property-tax savings; the bill is now $1.7 million per year, the application states.
In return, the investors have promised at least 200 people will work in the Woodbury building for tenants at all times.
Investors Brian Lee, left, and Dennis Friedrich discuss the Woodbury proposal at the Nassau IDA meeting. Credit: Newsday/James T. Madore
It "is the last building" in eastern Nassau before the Route 110 corridor in Suffolk County "and a lot of tenants want to be [in Suffolk] because the rents are cheaper," said Brian Lee, a member of the acquisition group and a broker at the commercial real estate firm Newmark.
"So, the tax abatements really help us to be competitive with the Melville market. We want to keep the tenants in Nassau County," he said.
In addition, the tax breaks are needed because of the costly building improvements that are necessary to retain and attract tenants, according to Daniel P. Deegan, the investors’ real estate attorney.
"The building, which is now owned by RXR, has fallen into some distress," he said at the IDA meeting. "This building really needs a shot in the arm."
RXR, which is led by CEO Scott Rechler, declined to comment to Newsday through a spokesman last week.
The IDA board voted unanimously to begin negotiations with the investors for a tax incentive package.
James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.
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