Philadelphia-based apparel company Bodek and Rhodes has agreed to lease 132,000 square feet of space at 176 South Washington St. in Norton.
It is hardly record-breaking, but Greater Boston’s industrial real estate market has nonetheless picked up as the third quarter of 2005 draws to a close, with a mix of leasing, sales and development activity percolating throughout the region, including a speculative warehouse project slated to begin construction in Taunton in the next few weeks.
Catering to companies with industrial space needs in the 15,000- to 25,000-square-foot range, Condyne LLC is planning a 137,000-square-foot speculative facility near the hulking new Jordan’s Furniture distribution center just off Route 24, said Cushman & Wakefield of Massachusetts broker James Thomson. “There aren’t many opportunities for the smaller warehouse tenants,” said Thomson, noting that much of the new product being produced is designed for users with six-figure requirements and above, facilities that are often difficult to subdivide.
Although colleagues at Cushman & Wakefield last week cemented a 132,000-square-foot commitment in Norton, Thomson said current leasing demand is populated by firms seeking a fraction of that amount. “It’s really where the action is right now,” said Thomson, both in the South region where the Condyne venture is slated and in other submarkets in eastern Massachusetts. Large requirements have been circulating as the economy has improved, but Thomson said Condyne could actually achieve pricier rents from smaller deals due to the lack of space for that constituency. The Taunton market has been achieving per-square-foot rents in the $5 range, but Thomson said Condyne could very well top $6 per square foot in the new building by employing that strategy.
Ceiling heights will be 30 feet in the property, which will also feature state-of-the-art mechanical, safety and security equipment. Besides the physical attributes, Thomson said he believes demand could be aided by the presence of Jordan’s next door in a massive 950,000-square-foot facility which opened just last year and was developed by Condyne as well. “That’s a real good draw,” said Thomson. “If you’re a wholesaler dealing with Jordan’s, why wouldn’t you want to be on the mother ship?”
The lack of supply for smaller users is also seen as one factor for the growing interest in developing industrial condominiums, a trend which has firmly taken hold in Massachusetts this year. Earlier this summer, for example, Leggat McCall Properties acquired nine buildings in Canton’s Shawmut Industrial Park with plans to renovate a portion and peddle it as condominiums for users needing between 3,000 and 15,000 square feet of space.
‘Very Viable’
Whatever the reason, Thomson and others concurred that industrial condominiums are being considered for properties throughout the area, including previously announced projects in Bellingham, Marlborough and Stoughton. “They are very viable,” said Thomson, particularly given the record low interest rates which enhance the ownership option. For the most part, the efforts involve renovation of existing buildings, said Thomson, who said the financial formula would make new construction difficult given the area’s hefty land prices.
The shape of the building is another key, said Thomson, arguing that rectangular is better than a square shape because it is easier to subdivide. Thomson is working with one developer to purchase and overhaul a 60,000-square-foot Andover building into industrial condominiums. While he would not provide details, Thomson said he anticipates a half-dozen condominiums can be carved out of the property once the developer takes control of the asset, which Thomson said should occur over the near term.
On the leasing front, Thomson called demand “soft” at present, but agreed with other observers that the momentum has improved since Labor Day. The Norton lease offered a particular boost given that the tenant is coming in from outside the region. “It should help get the local economy buzzing,” said Cushman & Wakefield Senior Director J.P. Plunkett, who represented the landlord in the lease to Bodek and Rhodes. As reported last Thursday on Bankers & Tradesman’s Web site, bankerandtradesman.com, the Philadelphia-based apparel company will take 132,000 square feet of space at 176 South Washington St., a former Mazda facility now being leased to multiple tenants.
Totaling 215,000 square feet, 176 South Washington St. is owned by a partnership between the Common Fund and Nordic Properties. The entity acquired the building in 2004 for $8.5 million and has set about on an extensive renovation program that Plunkett said was critical to getting the deal with Bodek and Rhodes consummated. Plunkett negotiated the terms for the landlord along with Cushman & Wakefield Senior Director Catherine Minnerly. The tenant was represented by Hank Amabile and Brad Spencer of Grubb & Ellis.
Other industrial leases said to be in progress at present include a 50,000-square-foot deal with FedEx at 55 Lyman St. in Northborough and agreements by Verizon and Anixter at 275 Wildwood Ave. in Woburn. Richards Barry Joyce & Partners are reportedly handling the FedEx lease for the landlord, Invesco Real Estate Advisors, while CBRE/Whittier Partners is broker for 275 Wildwood Ave. Officials at both firms were unavailable to discuss the activity, but sources insisted that all three agreements are done or nearing completion.
The brisk leasing pace is expected to spark even greater interest for industrial buildings, several of which are on the block for sale. Besides the Canton assets, Leggat McCall Properties recently purchased an industrial building in Marlborough, paying $11.5 million for 11 Forbes Road. Meanwhile, CBRE/Whittier Partners is helping Atlantic Tambone sell a modern warehouse facility in Methuen, 14 Aegean Drive.
