Although the Methuen Industrial Center in Methuen is now completely leased, experts say companies that need manufacturing or distribution space north of Boston still have plenty of options.
One down. Many more to go. Despite last week’s long-anticipated lease-up of the Methuen Industrial Center in Methuen nearly five years after the 235,000-square-foot building broke ground, commercial real estate professionals say options remain plentiful for companies needing either manufacturing or distribution space north of Boston.
“The market is very soft right now,” acceded Auburndale Realty Co. President Robert J. Nahigian. “The amount of space [for lease] is really unbelievable.” After enjoying considerable success in the technology boom that ran through 2001, industrial landlords have suffered in lock step with the crumbling high-technology sector ever since in such communities as Billerica, Woburn and Wilmington and up Interstate 93 and Interstate 495 around Lowell, Methuen and Haverhill. According to Spaulding & Slye Colliers, the North and I-495/North industrial submarkets posted more than 800,000 square feet of negative absorption last year to start 2005 with availability rates of 16.4 percent and 22.7 percent, respectively.
“There just hasn’t been a lot of activity up there,” said CBRE/Whittier principal David Connolly, whose firm served as exclusive leasing agent for the Methuen Industrial Center, developed by Atlantic Tambone Inc. of Lynnfield and Cigna Investments. Even sporting 30-foot ceilings, an EFSR sprinkler system and other state-of-the-art attributes, the hulking structure had only completed two deals that consumed 36 percent of the space prior to the just-signed leases.
“It was [satisfying] to get the building fully leased,” Atlantic Tambone Inc. principal Anthony A. Tambone said last week after Crown Cork & Seal committed to 85,000 square feet and Mattress Giant took more than 63,000 square feet. Connolly and CBRE/Whittier principal Bruce Grean negotiated for the Methuen Industrial Center, while CBRE/Whittier principal Mark Reardon and Carl Gersbach from CBRE’s Philadelphia office represented Pennsylvania-based Crown Cork & Seal. In the smaller of the two deals, which were first reported last week on Banker & Tradesman’s Web site, Harmon Lewis of National Commercial Brokers served as tenant agent for Mattress Giant.
Although it took considerable effort, many observers said they were confident the Methuen building would eventually reach full occupancy. “It’s excellent product,” said Klemmer Assoc. principal Greg Klemmer. If nothing else, the completion of the leasing program does eliminate a key competitor in the region, but brokers quickly listed numerous other buildings that remain on the industrial tenant shopping list.
‘A Tenant’s Market’
CBRE/Whittier itself is assisting several area landlords with industrial leasing campaigns. Among them is Cabot Properties, owner of 275 Wildwood Ave. in Woburn, which has 156,000 square feet of high-bay warehouse/light assembly space available. Totaling 221,000 square feet, 275 Wildwood Ave. has 30 loading docks, 40-feet-by-30-feet bay spacing and more than 800 parking spaces. Connolly and Levine are handling that assignment, and are working with Reardon on the leasing of the Wilmington Industrial Center, which has more than 200,000 square feet available near Routes 38 and 62 in Wilmington. In Amesbury, Connolly is representing the owner of 10 Industrial Way for a 100,000-square-foot availability located directly along I-495.
According to Nahigian and others, space users seeking 100,000 square feet or more remain in short supply in the north region, although many said they are encouraged by an increase in smaller- to mid-sized requirements that are beginning to circulate. “People are starting to look” for space, said Klemmer, who recently held an open house for brokers at 20 Computer Drive in Haverhill, a manufacturing building previously occupied by Analog Devices. As with the warehouse/distribution market, manufacturing demand was slow for most of 2004, said Klemmer, who has conducted several tours in recent weeks at 20 Computer Drive after seeing virtually no candidates towards the end of last year.
“Overall, I think most people feel we’re moving in the right direction,” said Klemmer. Getting tenants to look at the Haverhill property has been the biggest challenge, he said, expressing confidence that the quality of the asset will yield a user should enough prospects see the building. “It’s absolutely beautiful manufacturing space that you can get rather cheaply,” he said, with Analog having pumped nearly $8 million in upgrades into 20 Computer Drive to satisfy a three-year contract. The space is currently being peddled at $6.75 per square foot on a triple net basis, said Klemmer.
Connolly said he is also upbeat about the north industrial market as the first quarter passes the midway point. “It has definitely turned the corner,” said Connolly, who is forecasting a slow but steady recovery in the coming months. Nahigian concurred that velocity is up among potential tenants, but warned that the glut of inventory could keep rental rates flat for an extended period. “It’s still a tenant’s market in general,” said Nahigian.
Joe Clements may be reached at jclements@thewarrengroup.com.
