How do you bring 100 percent occupancy to a commercial building during these challenging times? R. W. Holmes Managing Director Dean Blackey explains how, with a case study of 320 Norwood Park South building in Norwood, MA.
The building has seen a flurry of leasing activities since R. W. Holmes brokered the sale of the building to Brave Dog Properties two years ago and has since been serving its exclusive leasing agent.
Brave Dog Properties also invested heavily in improving the property, upgrading common areas and restrooms, and adding a fitness center and a communal freight elevator.
320 Norwood Park South, a 40,000-square-foot, two-story building, has become a Class A option in the 128 South market.
How do you bring full occupancy to an empty building during these challenging times?
Dean Blackey: By being extremely creative, focused, innovative and understanding the market dynamics.
Give us an example of this.
DB: We all know that office has had a rough go of it. There’s a lot of space out there, and what I think I’d use as an example is a building that we just finished leasing. It’s 320 Norwood Park South in Norwood, Massachusetts. This 40,000-square-foot office building had been sitting on the market for nearly two years with very little activity. It was over 50% vacant, and it was also in an office park. So, it was competing against other similar spaces.
What did you do?
DB: We looked at this building and brought in one of our good clients, an investor called Brave Dog Properties, and its CEO, Adam Reimer, who tends to be one of our more creative landlord clients. We took a look and said, ‘You know, we think there’s a way to reinvent this building.’ What we discovered was that there’s a lot of demand for flex users out there. For people who can’t go into conventional office buildings, especially in the `28 South Market, the flex and industrial route could be easy.
What about traditional 20ft clears and multiple loading docks requirements?
DB: The reality is there’s a large contingent of users out there that they just can’t go in a conventional office building. Maybe they have some shipping and receiving needs that are a little bit more than your average UPS delivery. Maybe they have large equipment that needs to come in and out on a semi-regular basis. Since they cannot go into a multi-conventional office building, we looked at this building and thought it was a great buying opportunity for our client.
Was the building for sale?
DB: It wasn’t necessarily for sale at the time, but we put in an unsolicited offer, and we were able to pick it up at a pretty good price. Then, Adam and his team immediately began looking at it for ways where we could get some of these flex users into the building, specifically with the second floor. It had a regular passenger elevator, but that was it. So, the solution was putting in a freight elevator outside of the building. It didn’t necessarily compromise the structural Integrity of the building or go into other spaces and whatnot.
How do you present this building to the market?
DB: That it was just a tremendous way of presenting to the market new options for flex use. Within a short span of 6 months, we pretty much filled the building.
With what type of tenants?
DB: One company, Gentex, who does a lot in the automotive industry with the military, and they just have a small R&D sector of their space that required these large CNC machines with venting. Because this is a two-story building, it was easy to go straight out the top. That is one example where you know the freight elevator was invaluable to these folks. They had never looked at potentially going on the second floor and had always assumed that they’d need to go into a single-story flex type building. It opened up for them, we later put in a lab company with large equipment with venting capabilities.
Can this approach be applied to other buildings?
DB: It depends on the location, condition of the building and the geographical market. 320 Norwood Park South had languished on the market for well over two years. We were quickly able to fill the building and what’s nice about a lot of these flex tenants is that they need to spend a lot on some of the infrastructure that goes into the space. Thus, they’re more apt to sign 10-year deals, whereas office tenants are still coming out of Covid and figuring out the whole ‘work from home’ dynamic. What we ended up with is a very stabilized building with great rents, long-term leases and basically a home for the clients.
It’s one of the things that I think differentiates ourselves and so this is a good example on how we like to look at these buildings creatively and come at it at a different angle. So, those of you out there who have challenging buildings and are looking for that type of creativity, we’d love to work with you and have the similar success like we did at 320 Norwood Park South.