By GREGORY ZELLER //
Anyone still doubting the importance of the pharmaceutical and biotech industries to the Long Island economy should take a peek at Rechler Equity Partners’ portfolio.
This branch of the royal family of LI real estate didn’t set out to anchor its commercial holdings with biotech tenants, but over the last decade-plus, “it happened organically,” noted Mitchell Rechler, who co-manages the Plainview-based real estate giant – and its 6 million square feet of commercial space, all in Suffolk County – with his cousin, Gregg Rechler.
When Rechler Equity Partners went private in 2003, splitting off from publicly traded Reckson Realty Corp., about 4 percent of its commercial portfolio was filled by pharmaceutical-industry tenants. Today it’s 25 percent – “a tremendous amount of growth,” Rechler told Innovate LI, “which is really reflective of what’s going on.”
What’s going on is science – at North Shore University Hospital and other Northwell Health facilities, at Cold Spring Harbor and Brookhaven National laboratories, at regional colleges and universities and bioscience parks and high-tech incubators. Scientific R&D has “become a huge industry and spurred growth,” Rechler said, much as the rise of Grumman and other manufacturing stalwarts once did.
“The Long Island economy was built around Grumman and the defense industry, which gave us companies like Symbol Technologies,” he noted. “Those industries all grew here on Long Island. Unfortunately, Long Island’s response to that growth wasn’t good enough, and those companies left.”
The Rechlers started noticing about five years ago that pharmaceutical concerns were filling a sizable percentage of their commercial portfolio, so much so that several current projects – including development of the 50-acre Hampton Business District adjacent to Francis S. Gabreski Airport in Westhampton Beach – are proceeding with a clear nod to biotech businesses.
Pharma firms haven’t come calling yet about the Gabreski project, Rechler noted, but tech firms have, and it’s all part of the same mindset: part scientific, part entrepreneurial, all growth.
And that creates a growing, and well-documented, need for workforce-level housing, one of the reasons Rechler Equity Partners has “taken it upon ourselves to develop residential buildings,” Rechler noted. That includes 500 new units in Amityville – the first 50 are scheduled to open in September – with 20 percent reserved at workforce-housing rates.
“We saw such a heavy need for this segment of real estate,” Rechler said, comparing the national suburban average of about 35 percent rental apartments to Long Island’s paltry rental inventory – just 17 percent of Island housing.
“That’s barely half of the necessary inventory,” he added. “So statistically, we saw the need.”
Fortunately, they weren’t alone. In addition to “a highly educated workforce and an entrepreneurial spirit that keeps growing certain businesses,” Long Island now boasts a number of organizations, activists and even elected officials dedicated to the same cause: promoting the Island as a biotech mecca and taking real steps, including real estate-related actions, to make it happen.
“Whether it’s multifamily rentals or commercial growth in different industries, I do think that more leaders today understand that it’s all part of the same sensible growth plan,” Rechler said. “And it’s critical for the overall health of Long Island.”
There is, of course, work to be done. “Nothing happens quickly” on Long Island, Rechler noted, and Exhibit A is his company’s 10-year effort to turn around a dilapidated Amityville trailer park. Although the park was already in the Suffolk County Health Department’s crosshairs and close to being shut down, it still took nearly a decade to bring a redevelopment project to fruition.
But a full decade is way too slow, according to Rechler, if Long Island is going to avoid further cases of Symbol Syndrome.
“It’s up to everyone who participated, whether it’s on the business end, meaning developers, or the actual people operating the biotech companies, or the government, or educators, to all work together,” Rechler said. “It’s up to everyone to make sure we’re growing industry together.”
The it-takes-a-village motif is one of the reasons Long Island’s innovation economy is percolating: Rechler referenced a growing need for biotech spaces fueled directly by regional altruism.
“Demographically, it’s still a wealthy area, with individuals who are donating to medical research and donating to local hospitals,” he said. “From that springs science and growth.”
And from that springs the intense residential demand – Rechler counted 800 inquiries already for those 50 Amityville apartments coming available in September – and “off-the-charts industrial demand.”
Servicing an increasing percentage of biotech firms – mostly younger companies with “strong financials,” Rechler noted – is a challenge, with one tenant requiring a climate-controlled wet lab and another in need of warehouse space with higher ceilings. But that’s the emerging market, according to Rechler.
It might not be proof-positive of biotech’s critical role in the Long Island innovation economy, but consider: In an era of empty box stores and vacated strip malls, Long Island’s biggest champion of pharmaceutical- and tech-space development boasts a commercial portfolio with a 98+ percent occupancy rate.
“As someone who’s very tied into Long Island – not just as a developer, but as a businessman – it’s critical for me that Long Island have its economic health,” Rechler said. “These are the industries that are growing, and we have to nurture them and eliminate as many obstacles as possible.
“In some ways, it’s about being an activist,” he added. “Government, academic institutions, business people, everyone needs to figure out what they can do to help these industries grow, and then we have to do what we have to do.”