Rechler Asked Suffolk for $2.5 Million in Breaks on Space With No Tenant

One of Long Island's largest industrial landlords has gone to the Suffolk County Industrial Development Agency for a tax package on a building it already owns, to renovate space it has not leased, for tenants it has not signed. The paperwork is public, it is unusually specific, and it is worth reading if you are shopping for space in the Hauppauge park or sitting on an aging building of your own.

The deal on paper

The applicant is REP 80 Arkay Drive LLC, of 85 South Service Road in Plainview, which is the headquarters address of Rechler Equity Partners. The agency's project abstract lists the principals as Gregg Rechler at 30 percent, Mitchell Rechler at 30 percent, Judith Rechler at 15 percent, and a GST non-exempt marital trust holding the remaining 15 percent.

The property is 80 Arkay Drive in Hauppauge, in the Hauppauge school district. The project is the renovation of about 133,755 square feet inside an existing 200,000 square foot building. The abstract calls the space functionally obsolete and says the applicant intends to bring it up to today's standards, with new HVAC, electrical upgrades, and fixtures and equipment for a tenant. The stated plan is to lease the renovated space to one or more tenants for technology, research and development, or manufacturing, with related office space.

Total project cost is $10,342,418: $7 million of renovation, $3 million of warehousing, fixtures and office equipment, $106,330 of legal fees and $236,088 of financial charges. The agency's file estimates 61 construction jobs.

The employment column has no names in it

Here is the line that defines this transaction. Present employees at the site: zero. Proposed first year: 25 people at an average salary of $96,407. Second year: 75 more at an average of $106,353. Grand total 100 jobs, an annual payroll of $10,386,701, and an average salary of $103,867.

Those are good numbers for Suffolk County. They are also projections attached to companies that have not signed leases. This is a speculative redevelopment, and the public benefit case rests on a landlord's forecast of who will take modernized space in the Hauppauge park in 2028. That is not a criticism of the applicant, who is transparent about it in the filing. It is a description of what the county is buying.

How the abatement actually works

The cost benefit analysis is where the mechanism becomes legible, and it does not work the way most people assume. The building's 2025 and 2026 taxes are $623,559, which the agency reduces to $3.12 per square foot across roughly 200,000 square feet. The renovated 133,755 square feet at that same rate produces the figure the abatement runs against: $417,316 a year.

The payment in lieu of taxes runs 15 years. The abatement starts at 50 percent of the tax otherwise due and steps down three percentage points a year, to 8 percent in year 15. The percentage is fixed for each year, but the underlying tax bill floats, so the dollar value of the break depends on what happens to assessments and levies in the meantime. Over the full term the analysis models $1,815,325 of property tax savings against $4,444,415 the project still pays.

Two more exemptions sit alongside it. Sales tax relief of $630,000, calculated as 8.75 percent on 60 percent of the $7 million renovation plus 8.75 percent on the $3 million of equipment. And a mortgage recording tax exemption of $77,568, being three quarters of a point on the $10,342,418 authorization. Total estimated benefits: $2,522,893.

The analysis carries its own caveat, in writing, that the projections are illustrative and assume no tax increases. On Long Island that assumption is generous, and it works in the applicant's favor in the presentation: holding the levy flat makes the abatement look smaller relative to what is paid than it is likely to be.

Where it stands and when it happens

The agency approved an inducement resolution on June 25 by a vote of six to nothing with one member recused, held a public hearing on July 20, and listed a request for a final resolution on the lease transaction at its regular meeting on August 13. Construction is scheduled to start in the second quarter of 2027 and finish in the second quarter of 2028.

Context on the landlord: Rechler Equity Partners runs a portfolio of roughly six million square feet, closed 2025 at 99 percent occupancy, and completed more than 800,000 square feet of leasing and sales activity that year. This is not a distressed owner. It is a very full one deciding that obsolete space in Hauppauge is worth $10.3 million to modernize, with help.

What it means for members

Two things to do with this, depending on which side of the building you are on.

If you need modern technology, research or light manufacturing space, put the second quarter of 2028 on your calendar now. Roughly 134,000 square feet of renovated Hauppauge product is scheduled to hit the market then, uncommitted, and the owner's carrying cost on it will already be partly abated. You will be negotiating with a landlord whose economics improved before you walked in the door, and that is a fact to raise at the table rather than discover afterward. It also means you should not sign a long renewal at a premium in that submarket without pricing this space against it.

If you own an aging industrial or office building yourself, read the abstract as a template. The Suffolk IDA will underwrite the renovation of functionally obsolete stock, not only new construction, and it will do so for a redevelopment with no tenant in hand. The job numbers that support the application were projections. That path is open to a smaller owner making the same argument about the same kind of building, and it is a materially cheaper option than the teardown most people assume is the only way to make a 1970s Hauppauge box leasable again.