Albany Road RE Seen Paying $27M To Secure 400,000 SF+ from Colony

As reported in The Real Report by Joe Clements

BILLERICA, MA — A pair of warehouse buildings here at 14 and 16 Progress Rd. are among a portfolio of five Colony Realty Partners assets totaling more than 400,000 sf being scooped up by Albany Road Real Estate Partners, sources are claiming in the wake of a spirited bidding exercise. The package being listed through Colliers International is expected to reap upwards of $27 million in line with estimates provided this March when its availability was first unveiled by Real Reporter.

“They were neck-to-neck right to the end,” one CRE veteran says of the portfolio that is also in Auburn, Hopkinton and Tewksbury. Calls to Albany Road founder Christopher J. Knisley were not retuned by press deadline, and Colliers Capital Markets chief Douglas V. Jacoby declined to acknowledge that group’s emergence as winning suitor despite multiple claims such is the case. Jacoby would only confirm that “we had a ton of people chasing it” and says the interest was mainly for the entire portfolio versus individual pieces, a result he had predicted in the earlier Real Reporter article when the marketing campaign was initially launched.

Although the group also harvested a prime office building in downtown Boston for $270 million, Colliers International has taken on numerous industrial assignments over the past two years, with a pipeline in excess of 1.2 million sf including the Colony holdings on the dais for 2015. Two in the mix have already changed hands, with a 50,000-sf building in Stoughton trading in April for $2.7 million, and this past week, 326 Ballardvale St. in Wilmington was taken over by Novaya Real Estate Ventures in a $24.5 million deal with Colliers client Deutsche Asset & Wealth Management (see related story, page one). The rapid fire nature of those transactions and deep response to the Colony listing suggests widespread demand for industrial inventory, according to Jacoby, whose team handling the surge includes Scott Dragos, Anthony Hayes and Timothy Mulhall.

Jacoby points to a combination of factors driving the demand. Improving fundamentals are one factor along with the relatively lower cost of entry and upkeep compared to higher-end product such as office, multifamily or retail. Tenant improvement costs are minimal, he notes, as are property management expenses. Many investors have embraced the limited supply in New England, especially product close to Route 128, as another lure. “There just isn’t a lot of nice industrial out there,” Jacoby observes.

The Colony portfolio was pitched less on glamour and more on function, with 19 Technology Dr. in Auburn praised by Colliers for flexibility enjoyed by tenants of the 42-year-old, 51-200-sf structure that can be seen from the Massachusetts Turnpike and offers clear heights to 28 feet. A newer entry is 82 South St. in Hopkinton, constructed in the early 1990s as the new home of Barry Controls, a com- pany located in Boston for several decades prior to filling that two-building property situated on 21 acres near Exit 21 of Interstate 495. It is “very well-designed,” Jacoby says in pointing to efficient column spacing, clear heights to 23 feet and a dozen loading docks as elements favored by the tenant and prospective buyers of the Colony portfolio.

Another single-tenant holding is 65 Sunnyslope Ave. in Tewksbury where the entire 152,000 sf is occupied by Eastern Bag & Paper Co. It has five loading docks and a drive-in door plus features column spacing of 40-by-30 feet and 40-by-50 feet. The Billerica buildings were constructed in the late 1980s on adjoining parcels totaling 12.8 acres, with 14 Progress Rd. a 58,000-sf structure and 16 Progress Rd. at 69,500 sf. Each house multiple tenants and were constructed to efficiently handle divergent requirements, as seen in the 15 loading docks available at 14 Progress Rd. and 16 at its companion property.

Sources tracking the Colony listing agree with promotional materials that lauded its cash-flowing nature and loyal tenant base as catalysts for the activity and suggest that was key for Albany Road’s willingness to pursue the deal aggressively, having reportedly made a late charge on the package.

Founded four years ago, the group has assembled a widespread portfolio now extending into the southeastern US but still concentrated in New England, with assets in every state save for Vermont. Office, retail and self-storage have been the main targets to date, investments detailed in various Real Reporter articles in recent years, most recently this May when Albany Road paid $35.3 million for 195,000 sf of first-class office space in Portland, ME.

On the 326 Ballardvale St. sale, Jacoby referred questions to Novaya, whose principals were unavailable as of press deadline. The 293,000-sf complex was owned by Deutsche predecessor RREEF since obtaining it in a large portfolio sale in Nov. 2005. A major draw is having National Grid filling all 106,000 sf one building at which the energy supplier recently extended for another 10 years.

Fully leased when sold, 326 Ballardvale St. is just nine miles from Route 128 and was touted for being institutionally managed and maintained plus having functional high-bay warehouse space on 26.3 acres that also extend into parts of Andover and Tewksbury.