New York property firm buys Long Island offices in a bet on suburbs

[NEW YORK] A Long Island, New York, office complex that counts Morgan Stanley and UBS Group as tenants sold for US$212 million, the biggest office deal in the area in the past decade.

The Birch Group purchased two buildings at 1 and 2 Jericho Plaza, with a total of 665,592 square feet of space, from DRA Advisors and Onyx Equities, according to a statement Wednesday. The properties, just off the Long Island Expressway in Nassau County, are nearly 95 per cent leased.

The Birch Group has been increasing its purchases of suburban offices as it bets on the post-pandemic staying power of flexible work arrangements. The Nanuet, New York-based firm has acquired more than US$1.1 billion of commercial properties in the tri-state area since 2020, including four buildings in Short Hills, New Jersey.

"We have signed several tenants in the pandemic that have come out of New York City," Mark Meisner, president and founder of the Birch Group, said by phone. "Employers have to continue to remain flexible and give their employees the optionality of working closer to home certain days of the week."

Early in the pandemic, New York-area suburbs saw a flurry of interest from banks and major finance firms that were assessing short-term offices outside the city. Some companies, including Apollo Global Management and Elliott Management, have opened locations or explored an expansion in the affluent Connecticut town of Greenwich.

While home sales have boomed across the suburbs, office-vacancy rates remain high. Manhattan continues to draw tenants looking for prime offices in the region, even as the surge in Covid-19 cases pushes companies to rethink return-to-work plans.

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