Ares Management Breaks Ground on Two Speculative Warehouses in Suffolk County

Ares Industrial Real Estate Income Fund has begun site-clearing work on two speculative warehouse projects in Suffolk County, pressing ahead on both despite the Brookhaven Industrial Development Agency's refusal to grant tax incentives for the larger of the two developments.

The first project, in North Bellport, calls for four warehouse buildings totaling 528,000 square feet on roughly 52 acres on the east side of Station Road, south of Woodside Avenue and north of Sunrise Highway. The Brookhaven IDA rejected AIREF's application for tax breaks because the project had no secured tenants, a rare outcome for a development of this scale. The IDA has since placed a broader moratorium on incentives for speculative industrial projects. Ares has a related proposal pending with the Brookhaven Town Board: a 523,000-square-foot warehouse also in Bellport, which the town has yet to approve.

The second project sits on a 25.6-acre wooded parcel in Yaphank, near the intersection of Station and Horseblock roads, bordered by the Long Island Rail Road to the north, Station Road to the west, and the Baseball Heaven sports complex to the east. Newsday reported the 332,970-square-foot warehouse and distribution building carries a projected cost of $45 million and is expected to accommodate up to three tenants, though it currently has none. Because the site is largely zoned for industrial use, the project does not require town board approval, but it does need a special permit covering the trucking component. The Brookhaven Town Planning Board has not set a timeline for that vote.

Residents near the Yaphank site have raised objections. One expressed fear over the potential contamination of nearby drinking water wells; another argued that Station Road is too narrow for truck traffic, creating a safety risk for pedestrians. The Suffolk County Water Authority had not commented on the Ares proposal as of the time of reporting, though it previously opposed an auto storage yard planned for the same site over the same water contamination concern.

The push into eastern Suffolk comes against a backdrop of uneven market conditions. Industrial vacancy in eastern Suffolk County stood at 8.2 percent in Q4 2025, more than double the 3.4 percent vacancy recorded in western Suffolk, according to Colliers data cited by Long Island Business News. The availability rate reached 4.6 percent in the first quarter of this year, with average asking rents at $16.15 per square foot, Colliers reported.

The risk of speculative development in the submarket is not without recent precedent. The Brookhaven Logistics Center, a three-building, 550,000-square-foot project developed by Manhattan-based Wildflower Ltd. and Barings on a 42.1-acre portion of a 71.4-acre parcel west of Sills Road along the Long Island Expressway, cost $162 million and received IDA incentives before the moratorium took effect. That project has yet to find tenants. Wildflower and Barings are also moving forward on a separate 550,000-square-foot development on Express Drive North, for which Bank OZK provided a $72 million loan last month.

With two untenanted projects under construction and a third awaiting town approval, Ares is making a substantial bet that eastern Suffolk's industrial demand will catch up to the supply it is helping to create.