Rechler Equities seeks tax breaks for new Medford warehouse

A major Long Island industrial developer plans to build a 65,000-square-foot warehouse in Medford, with the help of tax breaks.

Plainview-based Rechler Equities applied for 12 years of tax breaks from the Brookhaven Industrial Development Agency in October for a new warehouse at the company's business district, a 73-acre swath of land near Horseblock Road in Medford.

The new building, at 15 Donalds Way, would be part of the developer's vision for a business district with multiple properties leased to a variety of industrial and warehouse tenants, said Gregg Rechler, who co-leads Rechler Equities with his cousin Mitchell Rechler.

"It'll feel like a high-end corporate business park," Rechler said.

Rechler Equities has already cleared the site for the warehouse, at the corner of Horseblock Road and Munsell Road, and is awaiting building permits from the Town of Brookhaven, Rechler said. The developer expects to complete the warehouse around the end of next year, according to the IDA application.

The developer predicts 15 Donalds Way will create 25 permanent jobs by 2029 and 60 temporary construction jobs. The total cost of the development is around $17.6 million, discounting the land, which Rechler Equities already owns, according to the IDA application.

Rechler Equities requested a mortgage recording tax exemption of up to $127,599, a sales and use tax exemption of up to $561,149 and a 12-year tax abatement deal, according to the application. The IDA accepted the application to consider the incentives during a meeting on Oct. 21, but has not yet scheduled a public hearing on the project.

The proposal comes after Gregg and Mitchell Rechler, who control more than 6 million square feet of commercial space on Long Island, completed another warehouse next door at 10 Donalds Way, according to the IDA application. That 140,875-square-foot warehouse is completely leased to National Grid and a game and trading card distributor, Rechler said.

Rechler Equities does not yet have a tenant for 15 Donalds way, but is in talks with "a handful of tenants" with "some very good prospects," Rechler said. He plans to have at least one tenant signed up to rent space in the building before they begin construction, Rechler added.

The project is one of a handful of speculative warehouse developments on Long Island — warehouses that are built before they are rented. The Brookhaven IDA passed a moratorium in 2023 on giving tax incentives to developers of speculative warehouse projects greater than 100,000 square feet, amid concerns that a growing number of developments could cause a glut of space, WSHU reported.

That moratorium, which has been extended through 2026, followed a 2022 study commissioned by the IDA that warned that vacancy rates could rise between 6% and 9% by 2027 in Suffolk County, Newsday reported.

That reality hasn't yet materialized. The vacancy rate for the county sat at 5.5% as of the third quarter, according to a report from real estate brokerage Cushman & Wakefield.

Tenants have snapped up newer industrial facilities this year amid strong demand, said Gary Chimeri, president of Farmingdale-based real estate brokerage Paramount Properties Group.

"The larger space, higher ceiling, newer construction builds are rented," Chimeri said. "And the reality is, if you have a building of size that is in good condition, the right location, it'll always continue to rent."

In eastern Suffolk, however, industrial vacancy rates are higher, at 7.8%, according to the Cushman & Wakefield report. Rechler attributed that higher vacancy to developers that built larger warehouses to attract bigger, national tenants, but that lack the ability to lease such large spaces to smaller tenants if a major deal falls through.

The 15 Donalds Way warehouse would be sub-dividable, Rechler added, making it more attractive to tenants of different sizes.