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Monday, March 31, 2014
Editor’s Note: In 2013 Steve Coyle, an investor in commercial real estate for the past 25 years, wrote several letters to the editor in NCNOW stating his reasons for opposing proposed retail zoning for Chappaqua Crossing. Last week he wrote again to NCNOW stating his reasons for believing that “this is a bad project that will be bad for our town. I don’t know how to say it any more clearly than that.”
A Town Board with three new members is again fast-tracking the application for a zoning change at Chappaqua Crossing to permit a 40,000-square-foot Whole Foods and 80,000 square feet of additional retail, which Supervisor Rob Greenstein has stated he intends to approve regardless. But this rezoning now makes up only half of Greenstein’s plan. The other half is to move Town Hall to the cupola building at Chappaqua Crossing and develop (or have Summit Greenfield develop) the town hall site with “transit-oriented” residential.
Because 1) a Master Plan review process is only just getting started, 2) Adam Brodsky’s volunteer Downtown Business Development Advisory Committee (meant to advise the TB on viability of the two-part plan and on its implementation) will not meet until late April, and 3) the details of Supervisor Greenstein’s plan have not been released nor its ramifications studied in any detail, NCNOW asked Coyle what he thought about the two-part plan. First, Coyle’s letter of last week:
Coyle: As I said in my previous letters to the Town Board, Chappaqua Crossing is an inappropriate site for retail development in my opinion. It remains an inappropriate site for retail development, even with the new site plan. Designing it as an urban village transit oriented development site will not change that.
• First, this is a suburban location that is not well-served by mass transit and is, at best, a destination location.
• Second, the roads and infrastructure to/from the site are inferior and already too crowded.
• Third, the proposed parking is inadequate if the site were to attract anchors/tenants such as the developer is proposing.
• Fourth, there is simply too much satellite to anchor square footage. As I have said in my prior letters, the proper ratio of anchor to satellite square footage is no more than 1:1. With a 40,000 square foot grocery, the proposed ratio in Chappaqua Crossing is 1:2 (anchor to satellite). In my professional experience, ratios such as this usually lead to higher-than-average vacancy rates and lower-than-average rents.
• Finally, with limited visibility from the major thorough fares, the center’s chances for success are substantially lessened. Less success = lower rents and higher vacancies = lower tax revenues.
This is a bad project that will be bad for our town. I don’t know how to say it any more clearly than that.
NCNOW: Any opinion about the “swap” of town hall property for the cupola building floors 1 and 2 as a town hall and police? I’m not sure whether the plan includes buying or leasing the cupola space, but I’ve heard that the developer might be willing to pay for all the renovations necessary to make town hall and the police department fit the cupola building.
Coyle: No opinion here. I haven’t studied the site that currently occupies Town Hall. I don’t know the acreage, the potential wetland issues, or the density/parking that the site can handle. I do think that the town hall is a superior site in terms of visibility and access, holding all other elements constant (but those are big assumptions).
NCNOW: What about apartments in floors 3 and 4 of cupola building that would be either:
a. affordable so that all 111 of the other units could be market rate;
Coyle: I believe that this would be against the 80/20 regulations [80% market rate, 20% affordable for multifamily development]. Affordable units need to be integrated with the market rate units. Also, this would add to the stigma of our town as being anti-affordable housing.
NCNOW: Or . . .
b. market rate, keeping the 20 affordable with the other 91 market rate units (60 fee simple townhouses, 31 market-rate condos)
Coyle: I have not walked the cupola space, nor have I seen blue prints for the space, so I cannot comment. I am not sure of the depth of the building, (which is often a problem when converting office to residential), the ceiling heights, window lines, etc. I can’t offer a professional opinion without careful analysis and the facts, sorry.
NCNOW: Does this dual use of the cupola building make sense?
Coyle: It could, but there would need to be separate entrances. The building would have to meet separate life/safety measures, etc. Mixed use is a tougher use. Mixed-use buildings tend to have more limited success, but there are examples of them working. However, in my experience, most successful mixed-use buildings are in urban, not suburban, locations, and even within urban locations, most mixed-use has had a mixed track record of success (pun intended).
NCNOW: Does the residential—the 111 units of housing (apartment buildings and townhouse condos)—help make the entire organism – office-retail-residential—work?
Coyle: I don’t think that there will be the synergies in this project that many other live-work-play projects have simply because this is a suburban destination that is not well served by mass transit.
The live-work-play environments that have worked have tended to be in urban locations and those near universities and colleges. Chappaqua fits neither of those characteristics, and we are certainly not a 24-7 city. (Nor do the surrounding neighbors want this location to be one!)
NCNOW: You’ve heard about the slip lane on the northwest corner of RBR and 117 (within Summit Greenfield’s power to alter), and creation of a northbound left turn lane to go from 117 on to Roaring Brook Road (only within DOT’s power to alter)? Isn’t that good enough?
Coyle: No, I think this is like putting a Band-aid on serious laceration that requires surgery. The roadways here are already terribly overburdened. This will be made much worse if Chappaqua Crossing emerges as a retail shopping center as well. You will have horrendous traffic congestion with or without a slip lane.
NCNOW: And on the subject of too much traffic, we’re heard from Planning Board member Tom Curley that in order to compensate for the 120,000 square feet of new retail footprint (since no retail is now proposed as occupying existing office space, but is all new footprint), Summit Greenfield is willing to have some amount of existing office space “go dark,” that is, foreswear the use of it. Is there a precedent for this type of deal?
Coyle: I’ve never seen it before, in my experience. Typically, the owner would have a maximum FAR (floor area ratio) on the site. They would have to demolish space before they could build additional space if they exceeded the FAR [floor area ratio].
NCNOW: Supervisor Greenstein views a 30,000-square-foot gym as not-exactly-retail—or not really as much retail at Chappaqua Crossing as the 120,000-square-feet number makes it seem—and therefore not harmful to existing retail in the hamlets.
Coyle: This could be true, but gyms typically generate even more traffic than most stores and they generate it for more hours per day. (It starts earlier and ends much later into the day).
NCNOW: He also points out that the 100 Building (on one side of the cupola building) will be eliminated, and the 300 Building (on the other side of the cupola building) will be reduced. So there’s some office square footage gone.
Coyle: How much space will be removed? I haven’t seen any estimates. I think we need numbers here.
NCNOW: One Planning Board member liked the plan for its adaptability: the bigger medium-box spaces could be broken up into smaller ones someday, if-or-when retail goes in the direction of smaller space. Is that a reasonable future?
Coyle: I really don’t see how junior anchor space can be reconfigured effectively into in-line smaller satellite space. Typically junior anchors require space that is deeper than in-line space.
NCNOW: Why is Whole Foods willing to come if it’s such a bad location and set up?
Coyle: First of all, has anyone seen a letter of intent from Whole Foods? I would like to know for sure that this exists. Has anyone seen it besides the folks from Summit Greenfield? If it does exist, typically it is not yet a binding agreement from Whole Foods that they will execute a lease at the project. All that being said, Whole Foods looks for a certain demographic and parking requirements. Chappaqua, Bedford, Armonk and many of the surrounding towns meet that desired demographic.
NCNOW: We’ve learned from Tom Curley that there will be a separate developer for the residential portion of Chappaqua Crossing, and he feels confident that the town would maintain a fair amount control – through site plan approval – of the residential. Does this sound encouraging?
Coyle: Yes. I think that is definitely a positive. I have long thought that the site works well from a residential perspective. Having an experienced residential developer to oversee the project is a positive.
NCNOW: Is Summit Greenfield interested in making sure the retail-office-residential complex works as a whole, or not?
Coyle: Summit Greenfield is interested in making as best a return for their investors as they can. That is their job, first and foremost. They are fiduciaries to their investors and that needs to come before all other considerations.
NCNOW: If the retail proves difficult to lease, what are a developer’s typical next options? Ask for more retail? Convert more existing office space to retail?
Coyle: Typically, it would be to lower the rent and see if you can fill the space at numbers that still cover the debt service and expenses. If a developer is unsuccessful in filling the space at numbers that work, then they may eventually face foreclosure from one of their lenders. I am not saying that this is going to happen in this case, but it is what often happens to unsuccessful retail projects.
NCNOW: How can we be sure that the town is a match for the developer? How can the town be sure of the value of what it’s getting (cupola for town hall) for what it’s giving (town hall property downtown) to the developer by granting the grocery-retail zoning change?
Coyle: Typically each side would make an offer and would use two independent appraisers (one hired by the town and one hired by the developer).
NCNOW: What else could work at Chappaqua Crossing? Large office space, we’re told, is not coming back. And Westchester is awash in it besides.
Coyle: I think good uses are age-restricted housing and assisted/independent senior living, as well as some more single-family residential.
NCNOW: Supervisor Greenstein has pretty much said that granting the grocery-retail zoning is a given, because the project has just gone on too long and gotten too far to go back now.
Coyle: I would hope that this is not the case. If it is, then why didn’t we know this before the election? The site has not been rezoned. There are no entitlements in place. There is no approved site-plan. This is still a long way from being a fait accompli, given my prior experiences.
NCNOW: Although the previous Town Board agreed in its settlement with Summit Greenfield only to conduct its review of the grocery-retail application within the time frame of about a year – and made no promise that it would approve the application – still, Greenstein says, the previous Town Board made its “Findings” at the end of last year based on the environmental review and stated that retail in the existing hamlets will not be harmed and that traffic problems can be mitigated. He seems to view that as a commitment by the town to go forward with the zoning change.
Coyle: Perhaps the Town’s lawyers are advising this, but it feels like a very conservative interpretation of the law to me. I have seen many other municipalities deny or severely delay a retail project like this at this stage or even later in the process. There is still a lot that has to happen here from a zoning and entitlement perspective. Further, the Town is in the early stages of a new master plan. It would not be unprecedented to have that impact the process.
NCNOW: Greenstein has said that if the town doesn’t approve the grocery-retail zoning now – after all this time during which Summit Greenfield has hoped and planned for it (and spent $12 million on it, according to Greenstein) – that the town will find itself “back in court.” Is this a typical dilemma for developers and towns?
Coyle: It is. Developers often use the courts as a weapon. I am not a lawyer and do not want to give legal advice. However, I would say that I have seen many developers lose at stages that are even later than this. To date, the Town has fared well in the courts. In my opinion, the Town has fared better than the developer.
NCNOW: But underlying all this, remember, the town wants commercial revenues. There’s the tax cap to deal with, and town (and school) staff have been cut substantially since the recession. The Chappaqua Crossing property is seen as the last potential source of commercial revenues, providing some relief to residential taxpayers. That’s why a previous Town Board cut the residential from the original 348 units down to 111 – to preserve the commercial potential of Chappaqua Crossing (office potential, that is – at the time, “retail” had never been mentioned).
Coyle: As I stated in my previous letter, I think that Summit/Greenfield and the Town Board (in the past at least) have substantially over-estimated the tax revenues that will likely be generated by the grocery-retail project.
NCNOW: In fact, increasingly, it has seemed that the supervisor views a deal in which he grants Summit Greenfield grocery-retail zoning as only half the plan he is proposing. The other half is to develop the town hall property in order to boost the “viability” of the Chappaqua hamlet. Development on this town hall site is seen as one of the few moveable pieces in a downtown constrained by few roadways – and one of those a rumbling State thoroughfare – almost no side streets, a steep hill, poor traffic circulation and too little parking. And as Greenstein has pointed out recently, half of South Greeley Avenue is taken with civic purposes – Bell, Library, Town Hall, rec field.
Coyle: Shouldn’t this be part and parcel of the whole master plan review? It would seem so, from my perspective.
NCNOW: So far Greenstein has left the rec field out of the swap concept; and while he has told Board of Ed members he’s thinking of an improved Bell field – with turf and lights perhaps – to increase “vitality” in the hamlet, he has distanced himself from Chuck Napoli’s concept of using the Bell field (and parking underneath) as the centerpiece of a pedestrian walkway behind the existing shops along South Greeley, faced by another row of shops along the side of the Bell field. I can’t tell whether that plan will surface as part of the Master Plan review process or not.
Coyle: There is a lot that may or may not go into the master plan. It is at the very early stages.
NCNOW: So Greenstein views permitting grocery-retail zoning at Chappaqua Crossing as the ticket to strengthening the Chappaqua hamlet through development on on the town hall site, most recently residential development.
Coyle: I am not sure that I follow this logic. Why would the Town give Summit Greenfield retail zoning at Chappaqua Crossing and give them access to the development parcel at Town Hall? I can understand swapping the Town Hall for a portion of the space at Chappaqua Crossing and allowing retail at the Town Hall site, but not at Chappaqua Crossing.
However, if you are implying that the Town would allow Summit Greenfield to develop retail at both Chappaqua Crossing and at the Town Hall site and, at the same time, would only be swapping office space at Town Hall for office space at Chappaqua Crossing, that would make no sense. If that were the case, then the Town should issue an RFP for the site in town and sell it to the highest bidder. The Town could then rent or lease space at Chappaqua Crossing or in another location if they wished. I am not advocating this, or any other proposal. It only seems strange to me that the Town Board would push for retail zoning at both Chappaqua Crossing and at the Town Hall site and would put Summit in the catbird seat as developer.
NCNOW: Greenstein hasn’t indicated how much residential he’s imagining, but he has mentioned market-rate housing for “young families” and “seniors,” along with the required percentage of affordables – and perhaps some retail at ground level. He believes that adding this residential foot-traffic will be a boon to commercial and cultural activity across the Chappaqua hamlet. Does that make sense?
Coyle: So they are talking about dense residential development on the current Town Hall parcel? Well, I would say that Town Hall is a better location for a mixed-use residential and retail than at a less urban-suburban location such as Chappaqua Crossing, but I think one still has to question what the desirability of dense urban style mid-rise product would be in Chappaqua.
We are 39 miles from the city, and other than a few close-in suburbs, such as Bronxville, there is very little of this product in the suburbs. While the millennials do seem to favor such product, they prefer it in urban locations served by mass-transit such as Brooklyn, not in outlying suburbs. That being said, the location near the train station is a positive. In my opinion though, Chappaqua would need to deliver a lot more amenities in terms of shops, restaurants and entertainment in order to attract such demand. It is a theme that has been successful in more urban and youth-oriented communities, but there is definitely a risk to developing such product in Chappaqua.
Steve Coyle has been an investor in commercial real estate for the past 25 years and has invested in office, retail, industrial, hotel, apartments and other residential projects on behalf of large institutions and high net worth individuals in markets across the United States and the world. He is currently working for a large institutional owner and developer of real estate. Any views expressed herein are solely his own and do not reflect the views of his current employer or any of his previous employers.
Previous letters from Coyle:
Letter to Town Board: TB members should never have suggested retail use at Chappaqua Crossing, NCNOW.org, 5/10/13
Open Letter to the Town of New Castle and NCNOW.org on Chappaqua Crossing, NCNOW.org, 5/14/13
Ltr to Editor: Retail at Chappaqua Crossing a big mistake for smaller gains than claimed, NCNOW.org, 9/24/13
Final Open Letter to the Town Board and Citizens of New Castle re: Chappaqua Crossing, NCNOW.org, 10/24/13