$8.8M Bid Enables Fast Exit Strategy on 275,000-SF Lancaster Warehouse

LANCASTER, MA —Abutting Route 2 and near major roadways such as Interstate 495, quick entrances and exits are a favored aspect of 580 Fort Pond Rd. among tenants, and such could now be said of the local investment partnership that has just sold the 272,000-sf industrial building for $8.8 million. The transfer to Horn Packaging Co., which plans to use the building for its growing operations, comes barely 18 months after a partnership led by John R. Parsons Jr. and Andrew I. Sacher secured the asset for $7.3 million in a short-term sale/leaseback agreement with the Rockport Co., whose term is expiring in time to enable Horn’s entrance.

“It has worked out well,” Sacher concurs in an interview this week, with icing on the cake being his group’s ability to subdivide the 138-acre parcel. So doing enabled them to retain 78 acres upon which the partnership aims to construct a new commercial building, most likely industrial to take advantage of the prime location. The size estimate would be 150,000 to 200,000 sf. As the founder of commercial real estate services firm Parsons Commercial Group, Parsons has the wherewithal in place to seek a tenant for the building, while Sacher is also a seasoned owner/operator in suburban Boston CRE circles.

The search for a new occupant of 580 Fort Pond Rd. led to the Horn Packaging commitment, explains Sacher, whose firm had also been willing to lease the asset until getting a viable offer. “They were great to work with,” Sacher says of Horn Packaging, a thriving business that also has received assistance from state economic officials in expanding the Ayer-based firm’s facilities. Led by Peter Hamilton, the company is expected to use the Lancaster building for its own operations rather than carve it into a multi-tenanted structure, relays Sacher, who referred other questions on that matter to Hamilton. The firm’s principal was unavailable as of press deadline.

In completing the sale of the primary building, Sacher recalls the mix of astonishment and skepticism ushered forth in the spring of 2009 when Parsons and he stepped forth to acquire 580 Fort Pond Rd. amidst a crippled CRE sales market and an industrial sector especially brutalized by the national recession. Even today, the industrial vacancy rate for 6.2 million sf of distribution/warehouse space in the Interstate 495 West belt is 19.0 percent, according to Richards Barry Joyce & Partners in its Q3 market survey. That induSTATus review shows absorption has stopped plunging during the past 12 months, but the average asking rent is at $5.33 per sf, a drop of 4.8 percent since Q3 2009.

Even amidst those rocky conditions, Sacher says Parsons and he felt comfortable that the price-per-pound of $28 per sf made sense given 580 Fort Pond Rd.’s pedigree. “It’s a phenomenal building,” relays Sacher, whose AIS Development Inc. owns commercial properties throughout the region. The former Digital Equipment Corp. facility rivals the best in the area, according to Sacher, citing the quality as one reason for attracting the latest buyer, who was willing to pay a substantial sum above the rate spent a year earlier.

In making the 2009 purchase, the investors were further comforted by the leaseback revenue in the Rockport agreement, adds Sacher, with that revenue stream making the gamble less risky. “That made all the difference in the world,” he says. “We knew then we could make it work.”