The Boston Business Park, located in the city’s Hyde Park neighborhood, is among the local sites visited during a recent space search by officials from Trader Joe’s Co. The California-based grocery chain is eyeing locations in Massachusetts, New Jersey and Pennsylvania for its Northeast distribution center.
With an industrial leasing need said to approach 500,000 square feet, Trader Joe’s Co. might seem easy to spot, but the trendy grocery chain somehow has eluded the radar of regional economic officials and those in the city of Boston, where one of the prospect’s most attractive options is situated.
“We hadn’t been aware of any Trader Joe’s [requirement],” Boston Redevelopment Authority spokeswoman Meredith Baumann told Banker & Tradesman last week after the owners of the former Stop & Shop distribution center in Hyde Park confirmed the newly flagged Boston Business Park was among the properties visited during a recent space search in the area. According to sources, CBRE/Whittier Partners has been retained by Trader Joe’s for the mega-assignment, although officials at the Boston-based real estate services firm refused to acknowledge whether that is the case.
Some observers spoken to claimed city and state economic leaders could play a significant role helping Greater Boston win out over competing destinations. Based in California, Trader Joe’s is said to also be considering New Jersey and Pennsylvania for the facility, which apparently would serve as its Northeast distribution center. Providing upscale groceries and private-label products, Trader Joe’s has more than 200 stores in the United States, including 15 in Massachusetts.
Describing Boston Business Park as still being “in the hunt,” for Trader Joe’s, one local real estate expert familiar with the requirement said predictable tax rates, job training assistance and other economic incentives might help land the operation either in the city or elsewhere in the metropolitan area. “That could make all the difference in the world,” maintained the source, who requested anonymity.
A ‘Cooperative’ City
At this point, it appears Trader Joe’s is mulling its options and preparing for the next step, which might include another round of tours, the source opined. Boston Business Park, which has 765,000 square feet of existing space and another 300,000 square feet of expansion capabilities, would be among the few existing properties that could accommodate such a user, although the source also cited the former Shaw’s distribution center in West Bridgewater as another large asset that might be considered acceptable.
Calls to Trader Joe’s officials at their headquarters were not returned by Banker & Tradesman’s press deadline. Also not responding were officials at MassDevelopment, the quasi-public agency charged with promoting economic growth in the Bay State. In Boston, the city’s Back Streets program was launched several years ago to retain employers and attract new businesses. Back Streets chief Jill Griffin was unavailable to discuss the initiative or detail any knowledge of the Trader Joe’s situation. Even if the agency was in the dark, Boston Business Park leasing broker J.P. Plunkett stressed that Back Streets has eagerly supported efforts to revitalize the park during the past year.
“The city has been extremely cooperative in all of our marketing efforts,” said Plunkett, who is listing agent along with Cushman & Wakefield colleague Catherine Minnerly. Owned and operated for decades by Stop & Shop, numerous jobs were lost when the grocery chain opened a new complex in Freetown. The 72-acre site was acquired by Saxe Investments and CommonFund Realty in 2003 for $27 million, while the team received another boost earlier this year when the Campanelli Cos. of Braintree also took an ownership stake. Campanelli is an experienced developer and owner of industrial and commercial properties throughout the region.
Although he would not discuss the status of the Trader Joe’s negotiations, or even confirm whether Boston Business Park is indeed being considered, Plunkett voiced general optimism about the pace of activity among industrial users as the midyear point approaches. Although demand has been slower than hoped for in recent months, the region’s industrial sector is starting to see gains from the mild economic recovery, Plunkett said, while a lack of new industrial construction has kept vacancy rates from deteriorating even further than they might have given the state’s lingering financial woes.
In its first quarter 2005 report, Grubb & Ellis estimated that the Massachusetts industrial market saw vacancies slip to 14.1 percent after 485,000 square feet of positive absorption helped open 2005 on an up note. Activity was greatest in the North industrial submarket, but Grubb & Ellis said all areas enjoyed positive absorption in the first quarter. The Central submarket, which includes Boston, posted the smallest gain at just 4,600 square feet of positive absorption, but its vacancy rate was the only one in single digits.
The Central submarket has a vacancy rate of 8.6 percent, while rental rates average the highest at $8.61 per square foot. Even after 207,000 square feet of positive absorption in the first quarter, the North submarket still had the highest vacancy rate at 17.5 percent. To date, most of the leasing velocity has come from small- to medium-sized requirements, but observers said it does appear that other large users are entering the market. The Staubach Co., for example, reportedly has a tenant seeking upward of 800,000 square feet coming into the region this summer, while Trammell Crow Co. reportedly is working on behalf of an industrial firm seeking at least 400,000 square feet. Calls to Staubach and Trammell officials to discuss those assignments were not returned by press deadline.
