ING Clarion Partners has sold the 312,000-square-foot industrial property at One Beeman Road in Northborough for $19 million.
Wrapping up the first quarter of 2004 on a high note, ING Clarion Partners has sold a 312,000-square-foot building in Northborough for $19 million. The industrial property at One Beeman Road is among five traded in a portfolio sale between ING Clarion and Texas-based Champion Partners.
“The industrial market is one of the real hot spots out there today,” said CB Richard Ellis/Whittier Partners principal Philip Giunta, who brokered the Northborough piece with CB/Whittier colleagues Elizabeth Thomas and Bruce Levine. While it has hardly been immune to the lingering economic slump, the industrial arena is reaching a fever pitch among real estate investors after a steady three-year buildup, according to Giunta.
“More and more money is being earmarked for industrial than for office buildings, especially vacant suburban office buildings,” he said. “It’s just considered a safer haven for capital right now.”
Calls to ING Clarion Managing Director Mark Weld and Champion Partners Chief Financial Officer Michelle Wheeler were not returned by press deadline. The remaining industrial properties in the ING Clarion portfolio are located in Dallas, Memphis and Chicago, although sources could not say what Champion paid for the total package.
Brokers Enthused
While industrial has become among the most desired product types around, observers stress that the credit of the tenancy, the location and the quality of the asset itself all determine just how much attention an industrial building will get on the sales block. Modern high-bay warehouses remain relatively rare in New England, said Giunta, especially those that meet institutional grade muster. CoStar lists the year-end 2003 vacancy rate for Greater Boston industrial at about 14 percent, but the bulk of the fallow space can be found in outmoded, poorly situated buildings, said Giunta.
Although first-quarter figures remain unavailable, industrial brokers spoken with said they are generally enthused by the current level of demand from companies seeking warehouse and distribution space. Even so, Spaulding & Slye Colliers industrial specialist William D. Bailey estimates in his Winter 2004 regional overview that available space outweighs current industrial requirements by a 4-to-1 ratio, and predicts that average asking rents will drop slightly over the near term.
After trending downward in 2002 and the beginning of 2003, the availability rate for industrial space in Greater Boston ended 2003 at 19.2 percent, according to Spaulding & Slye, representing a 3.3 percent hike for the year. Industrial absorption reached negative 1.3 million square feet during 2003, with several large space offerings coming on line throughout Interstate 495, particularly in the traditionally solid South submarkets.
Such dour results have done little to slow investor momentum, however, underscored last month by the $45 million sale of two warehouses in Central Massachusetts to the Intercontinental Real Estate Fund. The acquisition of the properties, both leased to Gillette Corp., was accomplished for a $350 million closed-end fund that Brighton-based Intercontinental is putting together. Intercontinental’s Fund III includes industrial as a target investment. The Campanelli Cos. of Braintree were the sellers in the transaction, which was handled by Trammell Crow Co.
Located in the Devens Industrial Park, the Gillette buildings include 18 Independence Drive and 66 Saratoga Blvd. The two properties total more than 725,000 square feet, while Intercontinental also received an additional development parcel as part of the transaction.
In a smaller industrial deal unveiled last week, NAI Hunneman Commercial Co. Vice Presidents Dennis Croke and Joe Flynn brokered the $1.8 million sale of 358 Faunce Corner, a 4.3-acre property in North Dartmouth. The pair acted on behalf of the seller, Volex Inc., and procured the buyer as well for the 55,000-square-foot building. The structure includes 17,000 square feet of office/flex space.
One Beeman Road was originally developed on behalf of Toys “R” Us, but was abandoned several years ago by that national chain. Levine has since worked to reposition the property for multi-tenant use, and said leasing interest has remained consistently strong for the facility. About two-thirds of the building has heights of 22 feet, while the remainder offers 28-foot clearance.
“It has done well,” said Levine, adding that Northborough itself has emerged as a solid warehouse/distribution center in recent years. That health is underscored by the speculative construction of another warehouse property at 55 Lyman St. by the Gutierrez Co. The initial 130,000-square-foot phase of that property is nearing completion, with Richards Barry Joyce & Partners of Boston retained to lease the facility for Burlington-based Gutierrez.
“You don’t build a spec property unless you feel comfortable about the market,” noted Levine, who reports that industrial rental rates have remained steady in the community despite deterioration in some markets.
Joe Clements may be reached at jclements@thewarrengroup.com.
