NORTHEAST SNAPSHOT, APRIL 2005
SPRINGFIELD INDUSTRIAL MARKET
The Springfield, Massachusetts, industrial market is suffering from the affliction shared by many smaller markets in that little or no speculative development is underway and buying/leasing activity is sluggish. While established industrial corridors in the New Jersey and Pennsylvania markets are in the middle of a strong recovery, secondary markets are stabilizing, curbing vacancy and attracting new users.
“Development is sporadic in Springfield, as the business climate is unfavorable [for industrial development],” says William Low, partner and vice president of commercial brokerage services at NAI Samuel D. Plotkin & Associates in Springfield. “There is confidence that once the city gets a handle on its finances that things will improve. Having said that, as a region, Western Massachusetts is doing fine.”
Development is continuing sporadically on build-to-suit projects primarily for distribution. Though those involved in the area’s commercial real estate market are working to attract manufacturers to the area, the primary industrial users are still utilizing warehouse and distribution space. The overall vacancy rate is approximately 10 percent, but Low notes that the numbers for manufacturing spaces are a bit higher.
To the west of Springfield, Westfield is experiencing increased activity. The majority of industrial development is taking place in Westfield due to its large tracts of industrial land. Lowe’s Home Improvement Warehouse is building a 250,000-square-foot distribution building in Westfield. This development is significant in that it will create new jobs in the region. Also, 80 acres of prime industrial property owned by Smith & Wesson has been cleaned up and is now going to market. The 80-acre parcel is considered by many to be the best-located piece of land in the Springfield area. Another significant deal is the possible expansion of the U.S. Postal Service on a 30-acre site in Springfield.
Though development activity is slow, significant leases have been signed recently. Home Depot has signed a lease for 450,000 square feet at the former Caldor building in Westfield and Low himself recently brokered a 187,500-square-foot lease for Vaupell at 101 Almgren Dr. in Agawam, just south of Springfield. Industrial rental rates range from $2.50 per square foot for large, older warehouses to a healthy $6 per square foot for smaller flex buildings.
In the near future, Low sees two areas to watch for increased activity. “I think the Chicopee Technology Park, which has been struggling, may do well as it is one of the few remaining viable parks in the area,” he says. “The Smith & Wesson land that is becoming available should also find an influx in interested parties over the course of the year.”
Though the market is not thriving, it is stable as the economy continues its recovery. Low is confident that the industrial market is in good shape and will continue to improve. “2005 may tread water, but the next 3 to 5 years will be very good.”
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