Philips International on Fixing Real Estate Problems
In real estate, the solution for a big problem can sometimes be found in small boxes.
Nearly 20 years ago, Philips International received approval for a multi-use building in Westchester, NY. The project was comprised of retail, a parking deck and a full-service gym. Right before site plan approval, Philip Pilevsky, Chairman of Philips International, added a mezzanine level to the plan. The plans, including the new mezzanine level, were approved.
“I thought my father’s idea, to add a mezz, was great! I was thrilled that it was approved,” his son, Seth Pilevsky said. “But to be honest, I wasn’t sure exactly what we would do with it. We had some ideas of what might work, but we didn’t have a particular use or tenant in mind. With the approvals in place, though, we would have been crazy not to build it.”
Approximately half of the mezzanine space was unfinished and unleased as most of the other tenants started opening their doors.
“I was meeting tenants there, left and right, and just couldn’t get anyone interested in the remainder of the space,” Seth said. “It was beyond me. This project had everything, a Starbucks, a New York Sport’s Club and a top-notch spa. Yet we couldn’t fill the space.”
Pilevsky eventually found an entrepreneurial solution.
“I was getting a little frustrated at my lack of progress,” Pilevsky said, “then I remembered a meeting I had, a few months earlier, with someone that used to work at Regis. At the time, Regis was the only player in the office suites market. I did some research, spoke to some brokers in Westchester, and felt like there was a demand for small office spaces. So I thought, hey, let’s go ahead and build some office suites.”
A layout was designed, including a common waiting area and shared bathroom facilities.
“We finished building and I kind of held my breath,” he said. “I thought that we had built a good product, but it was still an experiment. As it turns out, it was a good call. We ended up leasing it up in no time.”
“And this was in 2006, pre-WeWork days. The concept was really limited at that time. I took this experience as a lesson to not only think outside of the box, but to reshape the box itself, like my father did when he added the mezzanine level to our plans.”
Philips International has integrated this concept into their business model and, to date, has built more than 100 office suites.