Cascade Promotion Corp. has leased more than 30,000 square feet at 445 Simarano Drive in Marlborough.
A List lease is giving the listless industrial real estate sector a needed spark to begin the new year.
Lured partly by the property’s freight rail access, List Distribution & Logistics Services has signed an 85,000-square-foot agreement at the Boston Business Park in the Hub’s Hyde Park district. The largest lease to date since the former Stop & Shop warehouse was acquired in 2003 by Saxe Investments and Commonfund Realty, the List commitment provides a welcome boost, said Cushman & Wakefield of Massachusetts broker J.P. Plunkett, exclusive leasing agent in partnership with colleague Catherine A. Minnerly.
“This was an exciting deal, and really paves the way for more deals,” said Plunkett, citing a trio of requirements currently circulating the property that are each between 100,000 square feet and 500,000 square feet. “We like our chances with all three,” said Plunkett, who declined to identify the prospects or say whether they are targeting the existing 765,000 square feet or two new buildings proposed as part of the mission to create a multi-tenanted complex at the 72-acre parcel.
Another value-added commercial project scoring big to open 2006 is in Marlborough, where Cascade Promotion Corp. has leased more than 30,000 square feet at 445 Simarano Drive. Acquired a year ago by Ram Management, the 175,000-square-foot industrial facility has since undergone a gut rehab that included upgrades to both the interior and exterior.
“Ram had a vision and that strategy is beginning to pay off,” New Dover Assoc. President Scott R. Hughes said last week after the lease was cemented. Framingham-based New Dover is exclusive leasing agent for 445 Simarano Drive, which is situated just off Interstate 495 at the recently completed Exit 23C ramp. A 20-year-old company that offers fully integrated incentive merchandise promotions, Cascade needed a new facility to accommodate growth, said Hughes, who would not provide details on the lease terms. Parsons Commercial Group associate John Coakley was broker for the tenant, which is expected to relocate from across town to the property by mid-April.
‘Robust’ Demand
The 145,000 square feet still available at 445 Simarano Drive is also garnering encouraging attention, according to Ram principal Brian A. Gagne Sr. The landlord is willing to subdivide the industrial portion down to 15,000 square feet and break up 16,000 square feet of office space into increments of 4,000 square feet, but Gagne said at least one firm is eyeing all of the office component and the bulk of the industrial offering. The new exit ramp has been a key draw, said Gagne, as well as the extensive renovations. A specialist in value-added projects, Ram removed a second-level mechanical mezzanine that had saddled much of 445 Simarano Drive with ceiling heights of just 14 feet, often a detriment when competing against modern, high-bay product.
“I knew that had to go,” Gagne said of the mezzanine, with the building now almost entirely providing 22-foot-clear height. Ram also installed a new electrical network and modern fire and safety systems while investing heavily in replacing outmoded doors, new concrete floors and improving the facade. “The building has great symmetry,” Gagne said of 445 Simarano Drive. “It was constructed very solidly and has an excellent location.”
Although velocity has hardly returned to the boom times seen at the start of the new millennium, Gagne called demand in the Marlborough area “robust” for industrial space, while Hughes and Plunkett said they believe 2006 could be a turnaround year for Greater Boston overall. Some observers are even suggesting the possibility of new inventory via build-to-suit construction or even select speculative development. The latter option should be a rare occurrence, however, Grubb & Ellis projected in its 2006 industrial market forecast.
Issued last week, the Grubb & Ellis overview by Research Manager David Brunelle predicted that demand for warehouse space will drive rents up during the first half of the year in the West submarket where 445 Simarano Drive is located, and maintained that landlords catering to evolving businesses such as medical devices or life sciences “stand to benefit the most.” The West region had the strongest fourth quarter in Massachusetts, according to Grubb & Ellis, amassing more than 79,000 square feet of net absorption there during the final three months of 2005.
Although the North industrial submarket had by far the best year in 2005 in the Grubb & Ellis report, with 493,000 square feet of net absorption overall, that area had a difficult fourth quarter as evidenced by negative absorption of 109,000 square feet to close out the year. That gave the North a vacancy rate of 17.5 percent, higher than any of the other three regions tracked by the real estate services firm. Only the tiny Central submarket that focuses on space close in to Boston was in single digits on vacancy at 8.1 percent, followed by 12.5 percent in the West submarket and 13.3 percent in the South.
Compared to negative 1.5 million square feet of net absorption posted in 2004, the 845,000 square feet of positive absorption for the state’s industrial market was clearly an improvement, but Grubb & Ellis did note that the outlook for growth in manufacturing jobs is dim for Massachusetts over the near term. While encouraged that rents did not slip in 2005, Grubb & Ellis recorded only a slight gain in rates last year, as the per-square-foot average of $7.61 triple net was just 17 cents above where rates averaged to begin 2005.
After being the only industrial submarket in the red for 2005 at minus 49,000 square feet of net absorption, the Central district that includes Boston will see a real infusion from the List Logistics lease, given that the firm will be migrating from Tewksbury in the North submarket. “This isn’t musical chairs,” said Plunkett, with the arrival instead offering the chance that new jobs will be created for the city. Efforts to contact List and the firm’s leasing broker, Greg Klemmer of Klemmer Assoc., were unsuccessful, but Plunkett said he believes the company was drawn to Boston Business Park because of a few hard-to-find aspects, including needed freezer space and a plethora of loading docks and space to park trucks.
Even in mandating truck accessibility, List was swayed substantially by the rail access, said Plunkett, adding that other tenants are considering Boston Business Park due to that feature. “It is becoming something that is helping differentiate us,” Plunkett said, suggesting higher gasoline prices may be a reason. “It can’t be a coincidence,” he said of the spurt in interest for rail service, even while stressing that List will not be abandoning the highways entirely given the requirement for truck accommodations.
Whatever the motivation, Boston Business Park has seen a decided jump in activity, Plunkett said. “It is clearly getting better,” he said. “Our pipeline is much better today than it was at the end of 2005, and far better than it was at this time last year.”
