Short on height

As Seen in Long Island Business News August 20,2014 By David Winzelberg

For industrial real estate broker Richard Cohen, things are looking up.
That’s because Cohen, owner/broker of Hauppauge-based Ashlind Properties, has three new listings — each with ceiling heights of at least 30 feet, a rarity among industrial buildings on Long Island.
Size matters when it comes to ceiling height for businesses specializing in warehousing and distribution. The increased capacity for stacking products gives companies more bang for their buck because they can utilize all that vertical space and store more within the same building footprint.
Cohen’s towering trio includes 100 Wireless Blvd. in Hauppauge, a 73,000-square-foot warehouse with 4,000 square feet of offices that has 44-foot-high ceilings in a third of the building. The two other tall boys are in Ronkonkoma: a 90,467-square-foot warehouse with 30-foot ceiling heights at 2060 Ninth Ave., and a 74,477-square-foot building with 50-foot ceilings at 2145 Ninth Ave. that can accommodate as many as 15,000 pallets.
Its not easy to find available high-ceilinged warehouses here, where most industrial buildings were designed 30 to 40 years ago. Cohen said the typical 1960s warehouse might have 60,000 square feet and a 14- to 16-foot high ceiling. In the 1980s, ceiling height on new buildings climbed a couple of feet higher. But most of that inventory still can’t meet the needs of many of today’s distributors.
“What was once considered to be adequate ceiling height for industrial properties – 14 to 20 feet – no longer works,” Cohen said. “These buildings to a large extent have become functionally obsolete for a company in the distribution business.”
Edgewood-based Abel Womack, which supplies material handling equipment that helps businesses move materials and organize their warehouses, has outfitted many of the area’s industrial facilities.
Bob Urban, the company’s major accounts manager, said high-ceiling, racked warehouses are “certainly the most efficient way to operate.”
The numbers show warehouses with higher ceilings are also in higher demand. The vacancy rate for Long Island industrial buildings with ceilings at least 20 feet high is 3.5 percent, while the vacancy rate for buildings with ceilings lower than 20 feet is 8.8 percent, according to Cushman & Wakefield. And average asking rent for buildings with ceiling heights of at least 20 feet is 6.3 percent higher than those with lower ceilings, if you can find them.
“Anyone who wants a 20-foot ceiling height or better there are limited choices,” said C&W industrial specialist Frank Frizalone. “We’re running around with a lot of clients looking to buy, but the product they’re looking for doesn’t exist.”
Though several construction firms offer roof raising for older industrial buildings, property owners say it is cost prohibitive. Mitchell Rechler, a principal of Plainview-based Rechler Equity Partners, Long Island’s largest industrial landlord, said raising the total cost of ceiling heights, including necessary infrastructure improvements, runs nearly $25 a square foot.
“It hasn’t been economically feasible to raise the roof and get a return on it,” Rechler said.
Rechler Equity’s new industrial product in the Hampton Business District at Gabreski Airport in Westhampton Beach will have higher ceilings. The company recently broke ground on its first project there, a 60,000-square-foot building with a 22-foot high ceiling.
For end users, raising the roof can sometimes make sense. Rubie’s Costume Company raised the ceiling heights of two of its industrial buildings in Melville. The company recently completed a 190,000-square-foot warehouse in Bay Shore with a ceiling height between 40 and 44 feet. Its sister building across the street, a 285,000-square-foot warehouse built several years ago, also has ceiling heights of at least 40 feet.
“They need the storage room to accommodate their customers,” said Bobby Schliessman, of MHM Realty, who handles Rubie’s real estate.