Several industrial and warehouse properties north of Boston are now being marketed, including 20 Computer Drive, a 203,000-square-foot industrial building in Haverhill.
It has been a chilly 2004 for industrial real estate, but as the summer draws to an end, some observers say the sector may finally be heating up across the Bay State, even in the traditionally thin north submarket.
“There has been a lot more activity since Labor Day,” said Klemmer Assoc. principal Greg Klemmer, who is marketing several industrial and warehouse properties north of Boston. The centerpiece might very well be 20 Computer Drive in Haverhill, a 203,000-square-foot industrial building owned by a local real estate trust. Leased through next May to Analog Devices, the structure is being shopped to users willing to occupy the entire facility, said Klemmer, who describes it as “the nicest manufacturing building in the state” thanks to substantial upgrades made by Analog for a specific high-tech manufacturing project.
Klemmer listed new drop-down ceilings, efficient floor plates and an array of technological investments made by Analog as major drawing cards. Once a 36-foot-clear distribution center used by Rich’s Department Stores, 20 Computer Drive now encompasses 12,000 square feet of office space, 156,000 square feet of manufacturing space and another 35,000 square feet for warehouse needs. Along with parabolic lighting, other features include a two-part epoxy floor, cafeteria, locker room and showers and extensive parking on the 20.3-acre parcel.
The landlord has resisted subdividing 20 Computer Drive, said Klemmer, forcing several users in the north market seeking between 80,000 square feet and 100,000 square feet to look elsewhere. With the Analog commitment in place through next year and a sense that the economic climate is improving, Klemmer expressed optimism that the facility ultimately will find the big requirement being targeted, predicting that the building’s unusual quality may even lure a user from another region.
“There’s definitely a wider geographic pull,” he said. “It’s a very special building.”
‘A Slow Return’
Another hulking manufacturing plant north of Boston also is being marketed to potential users needing large blocks of space, with CB Richard Ellis/Whittier Partners retained to lease 1600 Osgood St. in North Andover, the former Lucent Technologies plant that was sold last year to Ozzy Properties for just over $15 million. Totaling 1.5 million square feet on 169 acres, the plant once employed more than 12,000 workers before the high-tech bust made the asset expendable for Lucent.
Renamed earlier this year as the 1600 Osgood Street Commerce Center, the single-story complex has a mix of office and warehouse space, but is primarily being offered to high-tech manufacturing users. Along with Druth Commercial Real Estate, CBRE/Whittier brokers Mark Reardon, David Connolly and Jason Levendusky are spearheading the leasing of the North Andover facility, another property that was invested in heavily by its former occupant.
Efforts to contact the leasing team for 1600 Osgood St. were unsuccessful by press deadline.
Connolly also is overseeing the marketing of another north suburban industrial building, that being 14 Aegean Drive in Methuen. Developed on a speculative basis by developer Anthony A. Tambone and Cigna Insurance, the modern distribution center has 30-foot-clear heights and 234,000 square feet of overall space, with 148,000 square feet currently available.
In its marketing materials, CBRE cites easy access to major highways and power of 3,200 amps as key elements of 14 Aegean Drive. Located within 28 miles of Boston, 26 miles from Manchester, N.H., and 89 miles from Portland, Maine, 14 Aegean Drive offers quick proximity to several regional centers, noted CBRE, which stressed that the developers are willing to subdivide the space to 45,000 square foot increments.
In Spaulding & Slye Colliers’ recent industrial market overview, principal William D. Bailey points out that many smaller industrial tenants, particularly those needing 20,000 square feet or less, are actually buying buildings vs. leasing, with record low interest rates helping fuel that trend. And while industrial real estate has not been as overbuilt as in previous cycles, Bailey nonetheless estimates that available space – some 12.9 million square feet – is six times the tenant requirements circulating in the Massachusetts market at present. That compares to a four-to-one ratio of supply to requirements seen at the start of 2004, said Bailey, stating that such a glut makes for “a long, slow return to equilibrium in the industrial market.”
With the third quarter about to wrap up, industry observers are hoping that the industrial arena will show sustained signs of life following the difficult beginning to the year. By Spaulding & Slye’s estimates, there was 1.3 million square feet of negative absorption in the state’s industrial market during the first half of 2004, including 409,000 square feet of negative activity in the north region. Overall availability has risen to 21.9 percent, up 2.7 percent from the beginning of the year, although asking rents have remained relatively stable. According to Spaulding & Slye, triple-net warehouse rents are hitting $6.25 per square foot for the best-located facilities, while manufacturing rents run between $6.25 per square foot and $8 per square foot.
