RIPON, Wis. — Walsworth, a Ripon-based commercial printer, prints products ranging from book blocks and high-end magazines to catalogs and the Farmers Almanac. Production includes everything from printing to binding to shipping.
Chasity Clark works there as a binder inspector. She sees a bit of everything pass through her hands and the machines.
Clark was recently working on a saddle stitching machine. With a few well-choreographed twists of the glossy paper, she loaded a handful of book pages into the machine.
“I feed the covers and loaders and I also inspect the books,” she said.
Clark sometimes sees the books she helped make after they’ve been delivered to customers.
“It’s kind of cool to see where a lot of these books go,” she said. “I just hope people enjoy them.”
Clark has been with Walsworth in Ripon for almost five years.
“I had started here as a temp, actually. I really liked it here, and I ended up getting a full-time job here,” she said. “What keeps me coming back is the people, and the work is different. I do something different pretty much every day.”
(Spectrum News 1/Nathan Phelps)
Walsworth is now seeking more of those people.
Human Resources manager Kelly Mundell said there are about 30 open positions. Mundell has been with Walsworth for nine years.
“We need people anywhere from entry level to highly skilled positions,” she said. “We need them in our bindery where they’re finishing up the products and in our press where they’re starting all of the printing process.”
Open jobs range from web press operators to bindery operators and inspectors and pre-press quality assurance.
“Our average tenure is 14 years. That’s both in the office and in the production area,” she said. “Usually when people stay and they like it, they stay a long time. That gives them nice opportunities to explore different departments if they’d like to, and people do that.”
(Spectrum News 1/Nathan Phelps)
Alex Kastenschmidt started at Walsworth six months ago as a web press operator. He said goal-oriented training has helped him grow into the job.
“Before this, I had no idea what I was doing — no idea about web press operating or anything that had anything to do with a press,” Kastenschmidt said. “I’m learning my way, but I’m getting there.”
(Spectrum News 1/Nathan Phelps)
More information about careers at Walsworth’s Ripon location can be found here.
MADISON, Wis. — Damage caused by Tropical Storm Hilary forced a California animal shelter to close, as it was deemed “inaccessible to the public.”
Now, 20 dogs that were previously staying at the Coachella Valley Animal Campus are being transferred to the Dane County Humane Society (DCHS) in Wisconsin.
Several animal welfare organizations worked together to fund the transfer. The dogs will be flown via chartered plane.
“We are very happy to partner with Wings of Rescue and Riverside County Department of Animal Services to help these dogs find new beginnings in Wisconsin,” said Lisa Bernard, DCHS’ public relations coordinator.
All 20 dogs will be available for adoption in Wisconsin.
(Dane County Humane Society)
“When it comes to pet adoptions, every day is critical for ensuring that the pets in our care will have a positive outcome. With our Coachella Valley campus closed, our top concern was that the animals, especially our large dogs, could languish in the shelter without a chance for a new and loving home,” said Erin Gettis, director, Riverside County Department of Animal Services.
Most of the dogs being transferred to Wisconsin are German Shepherds and Siberian Huskies.
Gettis said large dogs are a primary contributor to overcrowding at animal shelters — both in Riverside County and around the U.S. Large dogs are commonly found at shelters for many reasons, including but not limited to “housing and financial limitations and a lifestyle that is not compatible with the needs of larger, more energetic dogs.”
Animal service officials in California said shelters were already overcrowded before the storm — particularly in Riverside County.
“Shelters and rescues continue to struggle with high intakes, overcrowding, and slower adoptions. We know how much our community cares about animals. We hope they will open their homes or tell their family and friends about the amazing pups arriving at DCHS looking for new homes so we can continue to save more lives,” Bernard said.
The 20 dogs heading to Wisconsin to find fur-ever homes were temporarily housed at the San Jacinto Valley Animal Campus before heading to the Ontario International Airport. Wings of Rescue met the dogs at the airport and helped board them on the plane. Wings of Rescue is “a nonprofit volunteer organization that transports pets to safety via chartered flights.”
(Dane County Humane Society)
“Wings of Rescue flies wherever we’re needed to help at-risk pets and, in this case, we’re thrilled to be taking mostly large dogs today,” said Ric Browde, president and CEO of Wings of Rescue. “Big dogs can be hard to place into new homes and we know these wonderful pets from the County of Riverside are going to new homes in Wisconsin, where there happens to be greater demand. Sometimes the only thing standing between an unwanted pet in one place and a new home somewhere else is a flight on one of our planes.”
Wings of Rescue said all dogs were in separate crates for the flight and had access to water during the trip. Plus, all dogs are fully vaccinated. The plane is fully pressurized; temperatures are controlled to ensure the dogs’ comfort during the flight.
Their flight left after 9 a.m. on Thursday, Sept. 14. They are expected to arrive in Wisconsin this afternoon. The flight is piloted by husband-and-wife pilots Kale and Anji Garcia.
The area down in the woods behind the houses on Route 426. The blackened ground shown in the photo is where the sewage from the house has run out into over many years.
P-J photo by Sara Holthouse
FRENCH CREEK — If a person went for a walk in the woods near Route 426 in French Creek it would not take them long to find a large, blackened area, that appears at first look to be a swamp.
In reality, it is leftover run-off from human sewage.
A house on Route 426 has been without a septic system and has had a sewage violation for a number of years now. In a statement to The Post-Journal, the Chautauqua County Health Department said they are investigating the problem.
“The Chautauqua County Health Department has documented a sewage violation at this specific residence in Clymer, Town of French Creek,” said Michael Faulk, county chief medical officer and interim public health director. “There is no evidence of an immediate health hazard to the general public. County officials met earlier this week for discussion while continuing this investigation and are working with the occupants of the property to resolve the issue. The county Health Department is considering further enforcement options.”
In the meantime, neighbors are getting desperate for something to be done.
“It’s something that they have been trying to work on for two years,” said Matt Cywinski, who owns one of the neighboring houses. “Nothing has been done. I’ve lived here for 25 years. It used to be dry back there, and now it is all wet.”
Cywinski’s girlfriend, April Rager, who also lives with him in the house, said the last man who owned the property passed away in 2019. Part of the current problem is that the people who live in the house — and have for a number of years — do not own the house. The house is currently under the name of a trust, and part of the current process is to get it out of that trust and under the name of the people living there. Rager said the problem has only gotten worse.
“The health department hasn’t helped,” Rager said. “I think the house needs to be condemned. On rainy days especially, you can smell it. I’ve had to take my dog to the vet three times, because you know how dogs are, if they smell something like that they’re going to go dig at it. It has killed some of our chickens.”
Rager said another problem has been that the health department has been told that the current occupants of the house do not have a lot of money. Both Rager and Cywinski said it appears though that recently they have bought a newer vehicle. Rager added that this is not a problem they have been facing with just the current people in the house. It has been going on for much longer.
“The only time I have seen something like a septic system for that house was when the previous lady had a 55 gallon drum out there, and she passed away a while ago now,” Rager said. “That has been the only sewer system there in the past 10 years.”
It is part of the state law that in order to sell a house, the septic system has to be in working order. The leakage behind the neighboring house also makes it so that if Rager and Cywinski ever want to sell, they cannot either.
“In New York state, wells have to be treated,” Rager said. “Not that we ever want to sell, but if we do we can’t because of this issue. Why are we the ones that have to pay?”
Additionally, Rager said she has also reached out to local state politicians about the problem, looking for anything at all to be done.
“There are three people in that house and they all use the restroom multiple times a day,” Rager said. “All of that drains out and comes down onto our property and the neighbor’s property. Something needs to be done. This wouldn’t happen if we were in Jamestown. Sewage is sewage and soon it will become a biohazard. This has gone on for way too long.”
Rager and Cywinski’s neighbor, Debbie Albright, has also reached out to the health department multiple times about the issue. Her biggest problem is the same, in that the sewage has come onto her property.
“My biggest problem is that it comes onto my property,” Albright said. “It seeps into the neighboring property. It probably taints their water. No one does anything about it, and someone has to because it is illegal.”
Albright added that the house has working toilets and showers and everything, it just all seeps out into a big barrel and out onto the ground and neighboring properties.
“Somebody needs to do something and figure out a way to contain the sewage,” Albright said. “They wouldn’t let others do that.”
Josephine Tooley’s home, which she has owned for 21 years, is located next door to the current Wells Enterprises building planned for reconstruction.
Photo by Braden Carmen
DUNKIRK — A house is just a house, but a home is something worth so much more. To one Dunkirk resident, that sentiment has her clinging to the place she has called home for more than two decades.
Josephine Tooley, a 70-year-old lifelong resident of Chautauqua County, owns a home neighboring the Wells Enterprises ice cream manufacturing facility on Main Street in Dunkirk. Despite a planned reconstruction of the Wells facility, including plans to demolish three nearby residences, Tooley has repeatedly refused to sell her home.
“I told them from day one, I can’t move. I’m not moving, but they still kept coming at me,” Tooley said of representatives acting on behalf of Wells Enterprises.
At a recent presentation of the reconstruction plans of the Wells facility, a 202,000-square-foot facility was depicted, including parking, truck bays, and green space. Brad Galles, a senior vice president at Wells, stated the output of ice cream products would be more than double the plant’s current production.
Along with the reconstruction of the modernized facility in Dunkirk would come the creation of more than 200 new jobs. The plans received positive reviews from members of the community, from Planning Board members at the presentation to county residents celebrating the plans on social media.
But there was one big problem with the company’s plans — they didn’t yet have all the associated properties secured, and it appears that won’t change anytime soon.
“They jumped the gun,” Tooley said.
In the recent presentation, Wells executives stated a desire to construct part of the new plant close to Newton Street — which would necessitate the purchase and demolition of three nearby houses. Negotiations for the three properties were underway at the time of the presentation, and terms of a sale for two of the three residences were agreed upon. Tooley, however, refused to do the same.
“When this started last month, they called all us neighbors in to meet with them. They told us they want to buy these properties,” Tooley said. “I told them right out, I can’t do that. I said I’m 70 years old … I can’t afford to do that, I can’t physically do that.”
Tooley claimed she was given a deadline to give an answer on whether or not she would sell. She still refused to sign.
“They keep throwing papers at me. … They were scaring the hell out of me,” Tooley said, attributing stomach aches, chest pains, and weight loss to the stress of the ordeal. “… All this stuff really scares me.”
Tooley lives alone in her home, as her lone son and his wife and children reside in North Carolina. Tooley claimed she previously rented a home on Central Avenue in Dunkirk for 28 years, from seven different landlords, before purchasing her home on Main Street.
“It’s a miracle I even got this house,” Tooley said. She has lived in her current residence for the past 21 years.
Tooley stated she was unable to discuss what has been offered to her in exchange for the property because of a confidentiality agreement entered into with the company.
“Money isn’t the most important thing in the world. I’m doing fine,” Tooley said. “… I told them, ‘If you want the property, wait until I croak, you can have it.’ “
Despite what she called “substantial” offers, what Tooley wants more than anything that has been offered is peace and quiet in the home she has lived in for more than two decades.
“I want to be left alone. I want this to end,” Tooley said. “… I want them to leave me alone.”
Adam Baumgartner, vice president of Wells Enterprises, told the OBSERVER, “We have no comment at this time due to open and ongoing discussions.”
Meanwhile, the city of Dunkirk has moved forward in its process to support the Wells project.
“The city isn’t waiting for anyone or anything as we push and promote the Wells Corporation’s proposed ice cream plant rebuild and expansion,” Dunkirk Mayor Wilfred Rosas said.
The city’s Planning Board approved the site plan on Aug. 25, then the Zoning Board of Appeals granted two area variances for the plan at a meeting on Tuesday, pertaining to the height of the new structure and setback requirements from Main Street and Newton Street. Both boards voted unanimously in support of the project.
“The quick action by our Planning Board and Zoning Board of Appeals is further evidence of this City’s commitment to Wells and its significant role in the future of our city and our residents,” Rosas said. “I think too that it speaks volumes to our other business partners – large and small – that the city of Dunkirk wants to partner with you and have your business and our city and residents succeed.”
OBSERVER Photo by Gregory Bacon
FCPT Holdings, a real estate investment company, purchased the Well Now Urgent Care building on Vineyard Drive in March for $2.1 million.
An urgent care center in Dunkirk has a new landlord.
The Post-Journal and OBSERVER have been analyzing real estate sales in Chautauqua County and recently looked at the sales from March 13-21.
During that time period, Carlsbad Fuels Corp. of Encinitas, California sold 3916 Vineyard Drive, Dunkirk town to FCPT Holdings, LLC of Mill Valley, California for $2,105,072. That is the address of WellNow Urgent Care.
According to its website, FCPT is an investment grade rated real estate investment trust, primarily engaged in the ownership and acquisition of net leased restaurant and retail properties. The company currently owns 1,030 properties across 47 states and 131 brands.
The company appears to have announced the purchase in March. In a news release, the company wrote: “Four Corners Property Trust, a real estate investment trust primarily engaged in the ownership and acquisition of high-quality, net-leased restaurant and retail properties, is pleased to announce the acquisition of a WellNow Urgent Care property for $2.1 million. The property is newly constructed and located in a strong retail corridor in New York. The transaction was priced at a cap rate in range with previous FCPT transactions.”
There was another million dollar sale in the southern end of the county.
During this time period Trustees of the R&S Barker Family Trust I sold four parcels in Ellicott to J2 Jamestown LLC, of Lakewood for $1,050,000. The four parcels are on Fairmount Avenue, between Sherman Avenue and Sessions Avenue, where Jamestown Auto Center is located. No changes have been announced for the auto repair center.
Also, Allen Sutter sold 1693 Route 394, Poland to J2 Falconer, LLC of Jamestown for $300,000. This is the location of Levant Motors. No changes have been announced for this auto repair center either.
According to the New York Department of State Business Registration, both J2 Jamestown and J2 Falconer have the same Registered Agent address, 12 Mall Boulevard, Lakewood. That is the address of LiteHouse Auto.
In a separate sale, a new bakery appears to be joining the Westfield business business district. Darlene Golibersuch sold 33 E. Main St., Westfield to Buttercream Babe Bakery, LLC of Silver Creek for $90,000.
According to its website, Buttercream Babe Bakery LLC is a small batch, everything made from scratch gourmet bakery based out of Westfield, NY. “We offer dozens of flavors of cupcakes & cookies. Whether you’re looking to treat yourself to a sweet snack or serve our sweets at your birthday party or wedding, we can help,” the website states.
The website notes their new shop in downtown Westfield will be opening soon.
Including the three sales previously mentioned, there were five sales total that topped $250,000.
The other two were as follows:
¯ 9376 North Hill Drive, Villenova sold for $385,000.
¯ 19 Lakeview Ave., Fredonia sold for $280,000.
From March 13-21, there were 82 documents transactions, with 42 of them over $1. The full list of sales over $1 is as follows:
MARCH 13-17
James Woloszyn and Jason Woloszyn sold 37 W. Howard Ave., Dunkirk to Mary Tere Lopez and Luis Angel Lopez for $192,500.
Louis Fernandez sold 17 Genet St., Dunkirk to EZ Property of WNY, LLC of Stockton for $60,000.
Samuel Fadale sold 165 Ivy St., Jamestown to Christopher Hoch for $109,900.
Platinum Property Acquisitions, LLC of Jamestown sold 907 Prendergast Ave., Jamestown to Michael and Jennifer Evans for $50,000.
A referee for the Loretta W. Greihm Estate sold 135 Falconer St., Frewsburg, town of Carroll, to Manufacturers and Traders Trust Company for $87,125.
Luis Ortiz sold 203 Deer St., Dunkirk to Neishaly Rodriguez for $45,000.
Scott Collins sold 20 W. Second St., Dunkirk to EZ Property of WNY, LLC of Stockton for $7,000.
Salam Development Corp. of Pittsburgh, Pa. sold Lot 10 Sunrise Cove, North Harmony to Massimo and Pasqualina Giorgione for $34,950.
Mercer Estate Capital, LLC of New York, NY sold 19 Terrace St., Fredonia to Michael and Krystin Dauphin for $135,000.
Barbara Vandette sold 11 Rumsey St., Silver Creek, to Haley Keller for $160,000.
The executors of the Last Will and Testament of Dolores M. Spink sold 244 English St., Jamestown to Madison Kehe for $47,500.
Dunkirk Home Properties, LLC of Fredonia sold property on Leopard Street, Dunkirk to EZ Property of WNY, LLC of Stockton for $2,000.
A referee for Wendy Dunn sold 15 Benson St., Jamestown to Chimera REO 2020-NR1 of Coppell, Texas for $186,998.
Allen Sutter sold 1693 Route 394, Poland to J2 Falconer, LLC of Jamestown for $300,000.
Trustees of the R&S Barker Family Trust I sold four parcels in Ellicott to J2 Jamestown LLC, of Lakewood for $1,050,000. The four parcels are on Fairmount Avenue.
Charles Alaimo Jr., Denise Degoyler, Lisa Delcamp, Mary Alaimo, Chad Alaimo, Joseph Alaimo and Matthew Alaimo sold 30-32 Elm St., Fredonia to Tina and Dwayne Raymond for $12,000.
John and Sallie Swanson sold 97 Camp St., Jamestown to Vanessa M. Von Volen for $88,000.
Kathy Campola sold 19 Lakeview Ave., Fredonia to John and Rebekah Conti for $280,000.
Michael and Peggy Sanfilippo sold 3996 Lawson Road, Busti to Joseph Sanfilippo for $215,000.
The Executor of the Estate of James Rice sold 825 Spring St., Jamestown to Kenneth Martinez for $19,500.
Lisa Rummings sold 526 Leopard St., Dunkirk to Benjamin Velk for $9,000.
A Trustee of the Elmer G. Johnson and Donna Johnson Revocable Family Trust sold 216 N. Pearl St., town of Carroll, to Michael Miceli for $65,000.
Eric Bense-Fay sold 4 Willis St., Jamestown to Anderson Fernandez Alverez for $16,000.
Dean and Kimberly Norcross sold 256 Mann Road, Mina, to Bleu Goose LLC of Findley Lake for $15,000.
Christina Alvarado sold 519 Columbus Ave., Dunkirk to Juan Barreto Rivas and Nellyace Rios Arce for $25,000.
R&R Developers of Ashville sold a parcel in Grandview Estates, Busti to Tammy Piazza for $49,900.
Michael Mallory sold 10644 Marylane Drive, Sheridan to Rhonda Shoup for $195,000.
Donald Ortel sold 9376 North Hill Drive, Villenova to Justin Ortel for $385,000.
Lawrence Borowski sold 42 Case Ave., Busti to HM Rental Properties NY, LLC of McKnight, Pa. for $131,000.
Stefan and Adriel Gestwicki sold 43 Albany Ave., Dunkirk to Frederick II and Amy Piede for $69,000.
MARCH 20-21
A referee appointed for the estate of David Evans sold 1855 New York Ave., Ellicott, to Federal National Mortgage Association for $107,608.
Carlsbad Fuels Corp. of Encinitas, California sold 3916 Vineyard Drive, Dunkirk town to FCPT Holdings, LLC of Mill Valley, California for $2,105,072. This appears to be the location of Wellnow Urgent Care.
IMHOFF, LLC of Dover, NJ sold 601 and 603 Main St., Dunkirk city to Moises Salvator Ane Lebron for $107,500.
Kelcie and Rebecca Brown sold 2211 and 6984 Cleland Rd., Charlotte, to Katelyn Miller for $138,000.
Joyce Mathews sold property on Bloomer Road, Chautauqua to Jason and John Mathews for $21,650.
Michele Morganti sold 214 Elmcrest Ave., Busti to David and Katherine Kassel for $82,000.
Stacey Lovern sold 718 Washington Ave., Dunkirk to Kratos Holdings, LLC of East Aurora for $130,000.
Joseph Caprino sold property on Grandview Ave., Busti to Mikhail Kolesnichenko for $50,000.
The village of Lakewood sold property on Hoag Road, Harmony to Anders Ohl for $3,000.
Samuel Maggio sold 20 Woodward Drive, Fredonia to Darrell and Kimberly Waag for $80,443.
Junior Abbey sold 215 E. Everett St., Falconer to Joshua and April Klice for $79,900.
Hans Auer and Kurt Eimiller sold property on Driftwood Road, Ellery to Mayville Holdings, LLC of Sewickley, Pa. for $37,000.
The executor of the Last Will and Testament of Stephen Spaulding sold 5921 Colt Road, Portland to Nikki Neal for $30,000.
Darlene Golibersuch sold 33 E. Main St., Westfield to Buttercream Babe Bakery, LLC of Silver Creek for $90,000.
Chester and Lena Leslein sold 909 Weeks Road, Clymer to David Jr. and Barbara Bricker for $81,176.
Megan Medina sold 927 Ann St., Irving, town of Hanover, to Scott and Alecia Murawski for $2,000.
Richard Bruce Jr. sold 1136 Hoag Road, Harmony, to Cody and Penny Bliss for $65,000.
The executrix of the Estate of Peter D. Epolito sold 118 Prospect St., Fredonia to Johanna Meyers for $89,900.
A&K East West Corp. of Frewsburg sold 29 Railroad Ave., Frewsburg, town of Carroll, to Andrew Vanevery for $112,500.
New data shows a growing number of commercial buildings in New York City have more debt on the building than they are currently worth.
It’s part of the changes to the commercial real estate market caused by the COVID-19 pandemic altering the way many New Yorkers work.
Eventually, property owners will be left asking an important question: is it worth holding onto their buildings?
Real estate analysts told NY1 it is something they are watching, with a lot of commercial real estate loans sunsetting by next year and needing to be refinanced.
The problem now is more than one in five office spaces are sitting empty in New York City, according to a New York University and Columbia University study. So many buildings are bringing in less revenue while at the same time, their commercial loans are up to be refinanced during a time when interest rates are significantly higher.
Higher costs and declining revenue will some leave property owners at the point where they may just give up the building and hand the keys back to the lender.
NY1 reached out to dozens of commercial real estate companies, lawyers, and banks to try to understand how many buildings could be in danger of this happening.
“As a rule properties with loans coming due and significant vacancies are likely candidates,” said Jeffrey Gural, the chairman of GFP Real Estate, in an email to NY1.
He added none of his buildings were in danger.
One lawyer told NY1 he had two clients who have offered their buildings back to the lenders.
Most companies declined to comment. That includes Brookfield Properties as well as Mack Real Estate – the parties involved in a recent transaction at 1619 Broadway, better known as the Brill Building.
In the middle of the 20th century, writers came up with hit after hit inside the halls of that building.
However, city documents show Brookfield Properties transferred the property to Mack Real Estate, which had lent Brookfield Properties money for the building.
The real estate firm JLL also has research that shows more than 500 commercial buildings in Manhattan have lost value since their purchase price, totaling more than $38 billion.
Additionally, 112 buildings have more debt on them than they’re valued at, according to internal models calculated by the firm. That data is from the second quarter of 2023. In the first quarter, there were 73 buildings in that position, known as “being underwater.”
Real estate analysts said there are many factors that go into whether a building goes into default. That includes the financial outlook for the company in charge, the long-term potential – or lack thereof – for the building and neighborhood, the building’s amenities and whether leasing is trending towards a more promising or concerning direction.
New data from the commercial real estate firm Trepp shows there are more than 70 delinquent commercial buildings in the five boroughs.
The delinquency category can range from owners being late on loan payments to foreclosure, according to Stephen Buschbom, a research director at Trepp.
The final step in the foreclosure process is defaulting.
Trepp reports the delinquency rate for office loans in the city was only 0.19% in December 2022. It rose to 2.07% in June of this year. Though, the figures are still far off from the 5.1% in 2011 seen after the Great Recession.
However, Buschbom said he fears the numbers later this year and next could get worse with billions of dollars in loans set to need refinancing by the end of next year.
“That’s when we’re really going to be looking to see what percentage of maturing loans end up defaulting,” he said.
He noted just because buildings are in foreclosure – or simply delinquent – there can be solutions and off-ramps to avoid default.
“Fortunately, there’s a willingness to try to work through these issues if the borrower wants to stay invested in the property,” he said.
The challenge, he added, is that the refinancing conditions are really difficult.
“For loans coming due this year the high rates, the constrains, the tighter credit conditions, they’re just facing almost impossible odds to refinance an office building because so many lenders are just saying we’re not touching that at all,” he said.
The fear, according to researchers like Buschbom, in a worst case scenario, a bank takes control of a building. And they are not always in the business of running a building – or even want the building. And that can have a damaging impact on the building longer-term.
“The signal that sends to the marketplace. Tenants looking for space are probably going to be hesitant to go and lease space that is suffering financially and facing receivership,” he said. “Whereas if the borrower has committed themselves to the property, they still have the ability to turn it around.”
In a memo this summer, the Federal Reserve called for banks to work with borrowers when possible.
And commercial real estate attorney Natalia Sishodia said she’s seen that firsthand with her clients. She said she had at least three clients in the city ready to hand over their buildings to lenders, but they did not in the end after working out compromises with the banks.
“If they don’t they would end up with this commercial spaces and this is not something banks really want to do,” she said.
One option would be for banks to go back to a program that was used in the wake of the financial crisis in 2008, according to Douglas Durst, the chairman of the Durst Organization. He is calling for a return of extend and pretend, which is effectively pretending the loan conditions should continue as is to a date later down the road. It kicks the maturity date of the loan further down the road, in hopes the owners and market will turn around, delaying the need to refinance.
Durst said none of his companies 13 commercial properties are in a position where they may go into default.
He’s said he’s invested in his buildings, adding amenities. He added that those owners who have already invested should be doing well.
During the lunch hour after NY1 interviewed Durst by the Bank of America Tower, one of the firm’s properties, the area was packed. Several lunch spots had lines out the door.
Durst said property owners who did not may have trouble attracting tenants.
“It’s a double whammy so to speak,” he said. “They need to bring more people to the building. And they need to borrow money to do that.”
Data from the Real Estate Board of New York, where Durst is the chairman, shows the highest number of people back in the office since 2019. However, that number is still 27% below the 2019 mark.
Several real estate experts consulted by NY1 agreed older office buildings are most vulnerable to this new commercial real estate market.
Another outstanding question is what sort of impact the change in commercial real estate will have on property tax revenue.
A joint study from New York University and Columbia University this spring predicted office values in the city will decrease by 44% by 2029.
Property taxes are the largest form of revenue for the city, according to the New York City Independent Budget Office. The city’s comptroller released a report this summer that about 20% of city property tax revenue comes from these buildings.
In that report, there’s a chart with potential outcomes for property tax revenues in the next few years.
The baseline has an increase in revenue by tens of millions of dollars in fiscal year 2025 and hundreds of millions of dollars more in 2027. But the pessimistic forecast projects a decrease in revenue from that baseline of at least $120 million each year from 2025 to 2027. The doomsday scenario would yield a more than $1.1 billion decrease compared to that 2027 original projection.
Investors are lining up for alternative assets including quality healthcare real estate as valuations for traditional commercial property asset classes such as office and retail languish.
You don’t have to look hard to see it happening—take Dexus’s recent fully subscribed $220-million equity raise for its unlisted healthcare property fund, for example.
Dexus Healthcare Property Fund (DHPF) has returned a five-year fund return of 13.6 per cent to investors to March 31, 2023.
The fund recently bought 9.95 per cent of Celsus Holding, which, along with Dexus Community Infrastructure Fund and Dexus Core Infrastructure Fund, manages the Royal Adelaide Hospital.
Oracle Investment Management portfolio manager Jack Magann notes Dexus has done well to raise capital for this unlisted fund, given property investors Charter Hall and MA Financial recently closed investor redemptions on two unlisted property funds.
“Investors are looking for assets that will continue to provide income and capital growth in an uncertain environment,” he says.
“While they are likely steering clear of unlisted office and retail funds, healthcare assets can provide more certainty for investors looking to park their capital in real estate.”
▲ Royal Adelaide Hospital, managed by Celsus Holding, Dexus Community Infrastructure Fund and Dexus Core Infrastructure Fund.
Australian Unity general manager—healthcare property Chris Smith says recently developed hospitals in great locations are especially attractive assets because they so rarely come on the market.
He also notes investors in the healthcare property sector tend to have specific characteristics.
“Hospitals grow over time, so owners need to be supportive of tenants’ businesses so they can grow but also stay at the property. What we like to do is buy land in precincts with strong future growth prospects.”
Australian Unity owns one of Australia’s largest unlisted healthcare property funds, its $3.9-billion Healthcare Property Trust, which returned 14.59 per cent a year for the five years to the end of June 2023. The fund raised $335 million of equity in March this year.
An example of a prime hospital property Australian Unity owns and manages is its Sunshine Private Hospital in St Albans, Victoria, Australia’s first all-electric private hospital.
“We’ve recently opened stage one and it has been well received by the community,” Smith says.
Australian Unity also recently bought 7.5ha of land directly opposite the new Melton Hospital site, about 50km west of the Melbourne CBD.
▲ A render of the planned Melton Hospital in western Greater Melbourne.
“This is an opportunity to partner with a tenant for the long-term,” Smith says. Australian Unity’s healthcare property trust has also just opened a $44-million sub-acute hospital at Kingswood in Western Sydney, directly opposite the Nepean Hospital.
Leon Hadchiti, national director for healthcare for commercial real estate business Colliers, says the demand-supply dynamic is supporting investor appetite for properties in the sector.
“While acute private hospitals are still highly sought-after, acquisition opportunities are increasingly rare and often at a premium as buyers look for high-quality assets with strong tenant covenant, WALE and potential development upside,” he says.
Weighted average lease expiry (WALE) measures the average length of leases for a property or portfolio of properties and is an indicator of how sustainable cash flow is.
Another recent marquee transaction was HMC Capital’s $1.2-billion acquisition of Healthscope Private Hospital’s portfolio of 11 private hospitals, completed at a yield of 5.8 per cent.
Hadchiti says specialist medical centres, which offer a range of allied health services and are typically in accessible town centre locations, are also sought after as they provide a good level of return on a medium WALE of 5 to 10 years.
“They are also at price points that give high-net-worth private investors and small syndicated funds the ability to invest in the sector,” he says.
“Also, some of the larger institutional funds are seeking to recycle capital through disposing these smaller assets in favour of private hospitals, life science facilities and development opportunities.”
▲ Charter Hall recently took a 50 per cent stake in the The Victoria Clinic at Prahran.
Magann says mental health facilities have been in high demand. A recent transaction is Charter Hall’s 50 per cent acquisition of the purpose-built mental health hospital, The Victoria Clinic in Prahran, in May for $51 million on a 3.99 per cent yield. The property is fully leased to Healthscope on a 20-year lease.
Demand drivers
Experts say tenant and lease quality tend to determine the attractiveness of healthcare assets.
“Tenants normally agree to a triple net lease with a term of 10 or more years. This certainty makes this type of investment very attractive,” Magann says.
In a triple net lease, the tenant is responsible for paying the base rent, the property’s operating expenses and insurance, which offers tax deduction benefits.
Yields for healthcare properties are sitting in a range of 3.99 per cent to 5.99 per cent.
Quality assets such as new and refurbished hospitals are at the upper end of the range and smaller, sub-A-grade assets sit at the bottom of the range.
Societal trends such as ageing and a growing population are driving demand for healthcare services and supporting healthcare property values, a dynamic that’s likely to continue.
Conversely, listed healthcare asset valuations are being brought down by the general malaise across the property.
At time of writing, HealthCo Healthcare and Wellness REIT, which invests in hospitals, aged-care facilities and childcare centres, was trading at a 19 per cent discount to net tangible assets (NTA).
“But listed healthcare is still doing better than the office sector, across which funds are trading at an average 31 per cent discount to NTA,” says Magann.
And it is a situation—healthcare real estate outperforming office and retail—that seems higly likely to continue for the foreseeable future.
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Hotels are becoming more popular for housing conversions, according to a new study from RentCafe.com.
They made up almost a third of commercial space retrofits in 2022, marking a five-year high, according to the rental web site’s analysis of so-called adaptive reuse projects that can help meet the nation’s housing needs.
“The decline of previous hotel markets has emerged as a significant catalyst behind the current wave of hotel makeovers,” the report said. A drop in travel demand at the beginning of the pandemic led hotel owners in tourist cities like New York and San Francisco to sell to redevelopers.
Hotel property sales have increased for eight straight years, according to CoStar Group, and are excellent candidates for housing because they have individual bedrooms and bathrooms.
While office buildings were the most popular commercial space to be converted into apartments last year as workers continued to do their jobs from home, the pace at which they were retrofit declined compared with the previous two years, the study found.
Construction costs and regulations on residential construction are limiting office conversions to smaller, older properties with more easily adaptable floor plans, despite U.S. office vacancies hitting an all-time high this year.
Factories, healthcare buildings and warehouses rounded out the top five most popular commercial spaces for housing retrofits.
Los Angeles led the nation in commercial space-to-housing conversions last year. Of the 10,090 apartments converted from other uses in 2022, 1,292 were in LA. Kissimmee, Fla.; Alexandria, Va.; Baltimore, Md.; and St. Louis, Mo. rounded out the top five cities.
RentCafe projects LA will remain the leader in so-called adaptive reuse in the coming years as the city pushes to develop new housing and address an affordability crisis that has pushed many LA residents into homelessness.
New York, Chicago, Philadelphia and Cleveland, Ohio round out the top five cities for future adaptive reuse apartment conversions, according to RentCafe’s analysis of Yardi Matrix commercial real estate data. It projects more than 4,500 apartments will be converted in the near term from retail stores, offices and hotels as developers look for creative solutions to develop new affordable housing.
The high rental yields of 6-10 percent that commercial properties offer, compared to 2 to 3 percent for residential properties, is the key reason for this trend.
While there have been enough examples of Bollywood stars residing in rented apartments in Mumbai rather than buying one or preferring to rent their apartments to others, there are some who purchase commercial space for leasing purposes.
Moneycontrol spoke to several experts, including real estate brokers and consultants, to understand why Bollywood stars or several high net worth individuals (HNIs) prefer to purchase commercial properties and rent them out instead of residential ones.
According to experts, the major reason for this trend is the annual rental yield that the commercial real estate market offers in comparison to residential real estate.
What is rental yield?
Rental yield is the amount the property owner receives annually by renting out a property. For example, if one purchases a property worth Rs 1 crore in Mumbai and earns an annual rent of Rs 8 lakh, the rental yield for the property owner is 8 percent.
Who rented out what?
Bollywood actor Salman Khan leased out 27,650 square feet (sq ft) of space spread over four floors to TNSI Retail Private Limited, a subsidiary of Future Retail Limited, in Mumbai, at a rent of around Rs 89.6 lakh per month in 2022.
In 2021, director Karan Johar leased out two commercial properties owned by him in the name of Dharma Productions for a rent of Rs 17.56 lakh and Rs 6.15 lakh per month.
Also read: Karan Johar renews lease of two commercial properties in the name of Dharma Productions
Actors Ajay Devgn and Hrithik Roshan also own commercial real estate spaces in Mumbai.
Why commercial?
“Commercial properties are the hot cakes. Thanks to economic growth, the start-up culture, and other businesses, commercial premises are in high demand. Commercial properties fetch high rental yields of between 6 percent and 9 percent. Also, when a commercial property is rented out, it is for a longer period of time than a residential property,” said Aashish Panday, Director at Monksproperty.com.
He added, “For example, a residential house gets rented out for one to five years, whereas a commercial property gets rented out for three to 15 years with a regular escalation in rent, which can be 5 percent to 7 percent per annum. Such rental hikes are not possible in the residential segment.”
According to Knight Frank India, the trend of Bollywood stars or noted public figures, including HNIs, investing in commercial real estate (CRE), has been prevalent for a long time.
Also read: Why do some Bollywood stars prefer renting apartments in Mumbai rather than buying them?
“In uncertain times like now, when economies globally are facing turbulence, this investment avenue becomes more attractive. Such wealthy investors generally have high but volatile active/primary incomes, and commercial real estate investments hold the potential to provide them with inflation-protected, stable annuity income in the form of rental cash flows,” said Vivek Rathi, National Director, Research, Knight Frank India.
He added, “The commercial real estate asset class generates a higher rental yield of 6 to 7 percent compared to the residential segment, which garners 2 to 3 percent.”
Also read: Salman Khan leases commercial space in Mumbai to Future Retail arm for Rs 89.6 lakh per month
Mumbai tops commercial real estate returns
According to CBRE India, another real estate consultant major, commercial assets like offices, retail, and warehouses usually have gross yields in the range of 6-10 percent in metro cities.
“Grade-A office spaces in Mumbai can easily offer an average yield in the range of 6-8 percent. Likewise, retail assets can offer yields of up to 9.5 percent in prime locations in Mumbai. With the high cost of land in Mumbai, the commercial real estate yield in Mumbai is usually higher compared to other cities like Pune, Bangalore, or Hyderabad,” said Anshuman Magazine, Chairman & CEO, CBRE India.
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ORLANDO, Fla. — The Association to Preserve the Eatonville community is currently suing the Orange County School Board over land previously used for the Hungerford School, and the group has now been joined by the great-granddaughter of the Hungerfords, who donated the land more than 100 years ago.
The complaint was filed in March of this year which states the school district failed to comply with its legal duties to safeguard the land for educational purposes.
Bea Hatlter is the great-granddaughter of Edward Hungerford who donated the land back in 1899. She says the land was intended for educational purposes, not for a private developer who was planning to purchase the land from the school district.
Hatler may reside across the country in Oregon, but she says her heart and family’s ambitions for land they once owned remain in Central Florida.
The family always wanted to see that land go to the people of Eatonville either for education or ways to better serve their community, she said.
“I’m 34 years seasoned real estate agent, and trust me, that would squeeze the people out of their community,” Hatler said from her Oregon home.
In 1899, Hatler’s great-grandparents donated 40 acres of land to the Hungerford School Public Charitable Trust. It was meant to provide a private school in Eatonville for African American children. In total, and over the years, 160 acres were donated. Hatler said she wants to see her families wishes carried through.
“It would be a junior college, it would be trade schools like the stem program,” she said. “It would be everything that would be hands-on trade learning, and give these people to leave Eatonville if they wanted.”
Prior to the lawsuit being filed in March, OCPS planned to sell most of the property to a developer for both mixed use residential and commercial development. The developer walked after seeing community opposition and the school board still has not made a decision about the future use of the property.
Hatler’s hope is that OCPS will use the land for its original intended use and honor that agreement, after more than 100 years later.
“Our family donated land for education,” she said. “For the Black people to have their own trade, their own town, and that was always out there.”
With Hatler’s name now attacked to the lawsuit as a co-plaintiff, she hopes that she can help hold OCPS accountable, and keep the district from abandoning its obligations to ensure her family’s donated land be used for education or other purposes for the public interest.