Column: Commercial Real Estate: Industrial Chic Comes to Greenwich
By Allan Murphy
Sentinel Business Columnist
For over a decade, Granoff Architects has been looking for a building to call its own. The right opportunity finally presented itself when CL&P, now Eversource, decided to sell some of its aging industrial buildings that once served as maintenance and repair facilities and parts warehouses, including one such facility here in Greenwich. The building, at 330 Railroad Avenue (across from Pet Pantry and the Lobster Bin), is for the moment tired and dated, but with a great location just two blocks from the Greenwich train station, a short walk to Greenwich Avenue, and one block from an I-95 entrance ramp.
Rich Granoff and his investment partner, Jeff Mendell of JBM Realty, closed on the purchase of the 25,000-square-foot building last Thursday, and have already started on a complete renovation of the property. The industrial “bones” of the building will be retained to keep the character and charm of exposed brick and 12-14 foot ceilings, but in most other respects the building will be brand new and maybe the most environmentally friendly office building in Greenwich—with LEED gold certification pending.
The renovation will produce a state-of-the-art class A office building with a cool, contemporary style that merges with its industrial roots—certainly a unique and distinctive property compared to the more traditional suburban office properties nearby. There will be new windows, HVAC, electrical service, fiber-optic wiring, plumbing, garage space, LED lighting, landscaping, and even a rooftop solar installation.
Granoff Architects expects to occupy most of the first floor beginning in January 2017, but there is 17,000 square feet of space that remains available, including the entire top floor of over 12,000 square feet. The asking rate for space is $80 per square foot, with the new owners prepared to contribute $60 per square foot toward interior improvements for new tenants. In addition, the building has a low “loss factor,” so tenants will be getting more “usable” square footage than in most competing buildings in central Greenwich, where class A asking rents are in the $85 to $120-per-square-foot range. So good value, in my opinion, but I should note that my firm is also responsible for getting it leased!
Speaking of “loss factors,” some commentary on this industry lexicon might be worthwhile. First, let me say that if five different architects measured the same building they would almost certainly come up with five different numbers for the “size” of the building. There are the interior dimensions, exterior dimensions, overhangs and entry lobbies and garages, vertical penetrations such as stairwells and elevators and utility shafts, window insets, rooftop or basement mechanical areas, etc. The measuring tools (lasers and software programs) have become more precise and sophisticated, but the definition of what to include or exclude in any given measurement remains open for discussion.
That said, most office space is assigned a “rentable” square-foot number (“RSF”) and a “usable” square-foot number (“USF”). The RSF number is what you pay rent on based on a price per square foot. The USF number is the actual square footage contained within the suite—the difference between the two numbers is used to determine the “loss factor” for a given space. For example, an office suite might be 4,000 RSF but have 3,000 USF—this would result in a difference of 1,000 per square foot, yielding a “loss factor” of 25 percent—i.e. you are physically occupying 25 percent less space than the square footage number being used to calculate the rent.
Is that fair? In a word, yes. Most office buildings have main entry lobbies, garage lobbies, hallways, common bathrooms, stairwells and elevators, utility chases, janitor closets, mechanical rooms, and other functional space that is either used by tenants directly or used to service tenant needs. So it’s not unreasonable to allocate this “other parts of the building” square footage on a proportional basis across all of the USF for the tenant suites.
However, it is important to understand the amount of such a loss factor so that you can compare buildings and spaces on an “apples to apples” basis. A high loss factor may be fine if a tenant is satisfied it’s getting appropriate benefit and satisfaction from beautiful atrium space or expansive entry lobbies and security desks. But you should know what you are getting.
Allan Murphy is a senior managing director at the commercial real estate services firm Newmark Grubb Knight Frank. He has specialized in the Greenwich and Stamford markets since 1996.