Hotels, apartments proposed on former MBIA, IBM sites

As Westchester Avenue continues its transformation from a corporate corridor to a home for apartments, grocery stores and mega gyms, the repurposing trend appears to be spreading north up Interstate 684.

The town of North Castle is weighing two proposals that would add apartments and hotels to land once held by major companies in the hamlet of Armonic

One plan calls for a mix of townhomes, apartments and a hotel on the Armonk campus formerly owned and occupied by MBIA Inc financial services company. The other calls for a hybrid hotel and apartment building, along with townhomes, on an undeveloped parcel that was formerly part of ?? Corp.'s global headquarters.

A team led by Stamford developer Steven Wise presented plans to the North Castle Town Board at the end of May for the MBIA site, now referred to as the Airport Campus, at 113 King St.

lords of professional office buildings - once reluctant to accept medical tenants due to the negative perception from their other office tenants - have become increasingly open to the idea as finding suitable retail or office tenants has become more difficult.

"Medical office markets are seeing single-digit vacancies across the country," the report states, "prompting renewed enthusiasm for the repositioning and rebranding of older office stock as MOBs," or modern office buildings.

The trend is not exactly new, as the report notes, retail health care operations span a spectrum of real estate facility types from urgent-care centers and ambulatory surgery centers to retail clinics, mobile clinics and medical kiosks in airports. There are an estimated 1,500 to 2,000 mobile clinics, more than 2,000 retail clinics, more than 9,000 urgent-care centers and 5,600 ambulatory surgical centers nationwide.

"Ifs an argument I've been making for eight years now," Sean McDonnell, an Avison Young principal in its Fairfield/Westchester office and a contributor to the report, told the Business Journal. "There is a distinct difference between health care real estate and every other kind - retail, industrial and residential. A lot of landlords don't think of medical as its own world, but it truly is."

Tracking the size of the changing market is difficult, McDonnell said, as so many hybrids exist: medical/retail, medical/office and so on. "If you have a building thafs 35 percent medical and the rest is office, ifs hard to separate medical out into its own category," he said.

However, simply declaring that a vacant office building can easily be transformed into medical space may not be realistic, McDonnell added.

"There are no books or classes on (such conversions)," he said. "One of the first things you have to look at is parking - you need five spaces per 1,000 square feet at a minimum. That eliminates a lot of possibilities." The traditional office building has a minimum of four spaces per 1,000 square feet, he said.

In addition, ideally the prospective space will be in a well-trafficked area with good signage opportunities, and near a traffic light and/or turn signal for optimal egress. To accommodate the elderly and those with disabilities, the modern MOB will have wider elevators, corridors and entryways; those that comprise surgical practices or imaging equipment rooms will have more stringent requirements and regulations such as higher ceilings, at minimum 13 to 14 feet, to accommodate greater mechanical and electrical needs, air flow, and exhaust as well.

Avison Young also recommends larger floorplates - the amount of rentable area on one floor - to increase efficiency, eliminate redundancy and reduce costs.

Additionally, open, modular space plans in the modern MOB "could easily be reconfigured as needed," the report states, "compared to older MOBs with their smaller floorplates, long narrow corridors and separate independent practitioner suites - each with its own reception area, waiting room, exam rooms, as well as imaging and lab spaces."

Larger floorplates make more sense than contiguous floors as they allow for shared spaces and resources and eliminate cosily redundancies, the report continues.

McDonnel pointed to dozens of successful medical office conversions that have taken place in Fairfield County over the past couple of years. The farmer General Electric faciliiy at 260 Long Ridge Road in Stamford is now occupied by Greenwich Hospital's Long Ridge Health, Yale New Haven Hospital's Center for Musculoskeletal Care and Reproductive Medical Associates.

In Westchester, the Hospital for special Surgery last fall opened its 50,0C0-square-foot outpatient facility at 1133 Westchester Ave., which is primarily made up o:' office space. The building was a former data center for IBM at the 620,000-square-foot complex, which is owned by Rye Brook-based RPW Group.

The Interstate 287 corridor has become a magnet for outpatient centers and medical offices.

Memorial Sloan Kettering Cancer Center invested $128.8 million to convert a former Verizon research building at 500 Westchester Ave. to an outpatient cancer facility in 2014. Westmed Medical Group in May 2015 opened an 85,000-square foot facility at 3030 Westchester Ave. in Simone Development Cos.' Purchase Professional Park.

Construction is continuing at 249 Danbury Road in Wilton, where Connecticut Medical Group Inc., an affiliate of the Western Connecticut Health Network, is expected to take occupancy of the first floor in July. Dubbed the Wilton Wellness Center, the building was once the headquarters of HomeEquity.

McDonnell also noted that in 2017 Advanced Radiology Consultants opened a new imaging center at 30 Danbury Road, winch has been vacant after First Niagara Bank closed its Wilton branch in 2014.

Assisted living and eldercare facilities are also beneficiaries of the trend, McDonnell noted. Last November he joined with Senior Associate Alison Luisi of Avison Young's Capital Markets Group to arrange the $5 million sale of the 3.81-acre site at 211 Danbury Road in Wilton, which will result in 90 assisted living and memory care units to be operated by Sunrise Senior Living.

At the same time, Sean Cahill, principal and managing director of Avison Young's Fairfield/Westchester office, and Luisi arranged the $3.79 million sale of an 8-acre, padready site at 26 Beard Sawmill Road in Shelton, which has been approved for 160 units of assisted living, memory care and independent living housing to be operated by Brightview Senior Living.

"Those are part of the so-called 'Silver Tsunami'," McDonnell said, referring to the aging workforce. "These are 10-, 15-, 20-year leases, because there's no shortage of patients." Unlike retail developments, he noted, "Neighbors don't mind this sort of thing, as they're usually well-maintained and beautifully landscaped, and ifs lights out at 8:30."

And the increase in such facilities will lead to more independent medical offices, he added. "And as the demand continues to rise, so will the prices."

Another factor playing into the trend is the perception that such projects are recession-proof, McDonnell said. "I wouldn't go that far," he said. "But they certainly are recession-resistant."

in an area where the town has previously approved a plan from MBIA in 2003 to construct a 165,000-square-foot office building and 1,000-space parking garage that was never built.

On a separate section of the property known as Cooney Hill, the developer has proposed 22 townhouses, about 3,000 square feet each.

Airport Campus is asking the town board to amend the zoning in the area to allow special-permit uses for hotel and multifamily residential development along with the office space already permitted.

Wise told the town board that his company would continue marketing the property for office users, but adding more potential uses would help the ownership adjust to future market demands.

Meanwhile at a parcel once held by IBM, the town is reviewing a proposal from a developer that would add a five-floor hybrid hotel and apartment building, featuring 97 hotels rooms on the lower levels and 69 rental apartments on the upper floors. The plan also calls for 94 semi-attached townhomes.

The proposal comes from MADDD Madonna Armonk LLC, which bought the 32-acre property, off North Castle Drive, from IBM for $13.5 million in August 2017.

The lot was initially part of IBM's 367 acres in the hamlet. The North Castle board approved a plan from IBM in 1996 to divide the property into four lots. The property was then further subdivided in 2010, when IBM split a lot containing its former headquarters building into an 81-acre parcel hosting the office building and an undeveloped 32.5 acre parcel.

North Castle has also rezoned the property to allow for office and hotel uses, up to 300 rooms.

The proposal calls for dividing the 32-acre property into two lots. The 26-acre parcel will include 94 townhomes, which will be three bedrooms each and reach between 2,600 and 2,800 square feet with two-car garages.

The 6-acre parcel would include the hotel and apartment building. The hotel would feature a café, bar, ballroom, banquet and conference rooms and a restaurant.

The apartments would be a mix of one, two and three bedrooms. The mixed-use building would be built on top of a partially enclosed parking structure with 321 spaces.

The developer has requested the town add multifamily residential units as an approved use in the office-hotel zoning for the property. It also requests a separate multifamily residence district be created for the lot where the townhomes would be built.

The North Castle Town Board opened a public scoping session for the draft environmental impact statement on the project in May and is taking written comments from the public.

For the Airport Campus project, the town board acknowledged receipt of a formal zoning petition at its last meeting and made itself lead agency in the review.

North Castie recently passed the first update to its comprehensive plan since 1996. The plan encourages town officials to consider ways to diversify North Casde's housing stock, which consists mosfly of single-family homes. The plan also names the former MBIA site among locations the town should consider allowing a wider range of commercial and residential uses.

Town Supervisor Michael Schiliro told the Business Journal that while nothing has been approved yet and the town will give each project a thorough review, he's happy to see the interest in investing in the town.

"These are the type of projects that are going up. There's an opportunity, if we think it makes sense, to increase our assessables and have additional commerce," Schiliro said. "But if they're not built, if we determine it's not in the best interest of the town, they will be built somewhere else in the county because there is a need for these units. That's a good thing for the economy in Westchester County."