AEW Capital Management has acquired the Methuen Industrial Center from Atlantic Tambone Corp. for $18.3 million. The property is located at 14 Aegean Drive in Methuen.

Demonstrating institutional-grade interest for Massachusetts industrial properties, AEW Capital Management has acquired 14 Aegean Drive in Methuen from Atlantic Tambone Corp. Also known as the Methuen Industrial Center, the high-bay, 234,000-square-foot facility was purchased for $18.3 million, or more than $78 per square foot, according to industry sources.

“That’s a pretty good number for the seller,” remarked one investment specialist familiar with the asset, which Atlantic Tambone launched in 2001 as a speculative project and was ultimately able to fully lease last year after landing two sizeable tenants. The Lynnfield-based developer and its investment partner subsequently put the building on the block in mid-summer, retaining CBRE/New England as exclusive broker for that assignment.

Reached last week, CBRE/New England principal Gary J. Lemire referred calls about the deal to the client, principal Anthony A. Tambone, who did not respond by Banker & Tradesman’s press deadline. Also unavailable were officials at Boston-based AEW, which reportedly secured the property on behalf of a Lucent Technologies pension fund. Despite the lack of official response, sources insisted that the deal has closed, helping to start the investment sales year on an up note after a busy 2005 for property transactions of all stripes, including industrial buildings.

Lemire, who worked with CBRE/New England principals David Connolly and Philip Giunta on the Methuen sale, did explain that industrial real estate has become popular among pension capital and other stability focused funds, contributing to more than $900 million of industrial property sales in Massachusetts last year alone. The buyer profile is widely scattered in that pool, however, with institutional capital only willing to consider newer properties offering state-of-the-art security and sprinkler systems and providing substantial clear height because such features are increasingly mandated by good credit tenants.

In research provided by CBRE/New England, for example, the northern suburban industrial market where Methuen is located has an overall vacancy rate of about 15 percent, compared to just 3.4 percent for modern product offering 28-foot clear heights or more similar to 14 Aegean Drive. “Within that competitive tier, there’s just no space to rent,” said Lemire, adding that the value of land for alternative construction such as office, retail or multifamily should keep the supply of industrial development in check throughout suburban Boston well into the future, offering comfort to buyers such as AEW.

‘A Good Approach’
While not for the faint of heart, speculative industrial projects have seemingly fared well in the Bay State recently, as evidenced by last year’s sale of 55 Lyman St. in Northborough, a 260,000-square-foot project launched sans tenant by the Gutierrez Cos. of Burlington. Not only was the firm quickly able to ink a solid anchor in McKesson Medical Surgical Inc., Gutierrez then reaped $16 million for the property from Invesco Realty Advisors of Texas.

The Methuen asset did take more time to secure tenants, but the developer ultimately succeeded in reaching full occupancy last summer when Crown Cork & Seal of Philadelphia leased 85,000 square feet and Mattress Giant committed to 63,000 square feet. By resisting subdividing 14 Aegean Drive and holding out for larger, well-known companies, Atlantic Tambone was able to attract the institutional crowd of money, sources suggested. “It was a good approach,” opined the source.

While finicky capital will only explore a limited universe of industrial buildings, observers said there has been interest from other sources for older assets, including opportunity funds and real estate investment trusts, while 23 percent of last year’s industrial sales in Massachusetts involved users, according to CBRE/New England.

“We’re seeing a lot of that,” concurred Gregory Klemmer, president of Klemmer Assoc. and a specialist on the northern commercial real estate market. Klemmer last year sold an 80,000-square-foot industrial building in Peabody to Wakefield Distribution, with the firm relocating from Danvers after Klemmer helped trade Wakefield’s property there to an auto dealer. In the Peabody transaction, Wakefield Distribution paid $11.2 million for 3 Tech Drive, while Klemmer late last month helped peddle an empty 15,000-square-foot industrial building in Topsfield on behalf of another client, Woodland Realty Trust. Micah Stubblebine of the Stubblebine Co. was broker for the buyer in that $1.15 million deal.

By Klemmer’s count, he has users with needs totaling more than 500,000 square feet out seeking to buy industrial product in the northern region at present, with continued low interest rates helping fuel that strategy. The leasing activity for industrial also has “started to pick up,” said Klemmer, a notion supported by recent industry reports.

In the just-released year-end figures provided by Spaulding & Slye, for example, suburban Boston’s industrial market of 62.5 million square feet had 503,000 square feet of net absorption during 2005, the first time since 2000 that the region has posted positive absorption. The pace did slow toward the end of the year, and nearly all of the gains were found in the North region, which recorded 550,000 square feet of net absorption for the year. No other submarket reached six figures in absorption for the year, and the Interstate 495 South market was in the red by 75,000 square feet even after a robust fourth quarter.

Rental rates for industrial space remained relatively static in 2005, Spaulding & Slye indicated. The average rate of $5.83 per square foot on a triple net basis featured a low mark of $5.45 per square foot in the South industrial submarket, which easily eclipses all others in size at 21.4 million square feet. On the other end of the spectrum, the scant 1.8 million square feet of industrial space in the 128/Massachusetts Turnpike garnered an average of $9.59 per square foot, well above the second highest mark of $6.73 per square foot sought by landlords in the I-495 Massachusetts Turnpike area.