Jumbo Pays Calare $14M for Flex Asset Listed by Transwestern

May 03, 2017 — By Joe Clements

1400 Providence Highway, Norwood, MA

NORWOOD—Jumbo Capital Management quickly gained an appetite for flex product in December buying the stabilized 575 University Ave. here, and the homegrown investor has fed that penchant once again in the $14 million purchase of 155,000 sf at 1400 Providence Highway in a trade by Calare Properties following that firm’s successful repositioning of the three-building asset also known as Norwood Business Center. Transwestern Consulting Group was exclusive sales agent and arranged $11.9 million from Middlesex Savings Bank used to finance JCM’s 12th acquisition over the past year, an assemblage valued in excess of $200 million.

“Calare’s strategic investment in 1400 Providence Highway focused on tactfully expanding the tenant base by offering well-priced, highly functional space that could easily be transformed to meet the needs of a wide range of industries,” Calare CEO and CIO Bill Manley says in a statement provided to Real Reporter where he relays the property bought for $9.1 million in November 2014 “has successfully delivered for our investors and now stands as a prime asset centrally located within a highly desirable industrial flex market.”

JCM principal Brad Spencer credits TCG for cobbling together the agreement in a presentation illuminating the submarket’s rapid improvement where 3.5 million sf of flex product in the Route 128 South stretch has plunged from 29.1 percent vacant in Q1 2013 to a mere 7.4 percent. JCM had already done its homework on the flex field in pursuing 575 University Ave., a 90,000-sf asset barely five miiles up Route One acquired for $13.5 million, but Spencer says the fresh TCM data solidified their confidence, as did the cash-flowing nature of the property. There is “really good visibility” from Route One (Providence Highway) of the 18-acre site, he adds, the parcel smack in the middle of the famed Norwood Auto Mile.

“This is a classic Jumbo Capital acquisition,” observes Spencer in noting Massachusetts is home to all three million sf secured since JCM was launched in 2009 by founders Jay O. Hirsh and his cousin, Howard Hirsh. Being about 15 minutes from the Quincy headquarters was appealing, he says, but Spencer explains their decision to pursue NBC was mainly due to the building’s recent performance, presence of “some really great tenants” and confidence the sector’s fundamentals will remain favorable for landlords.

“You just are not going to see developers building single-story flex space anymore inside Route 128,” Spencer declares in pointing to a slew of infill sites that have been demolished in favor of apartments and retail this decade. “It just is not going to happen.”

TCM’s Capital Markets team of principal Christopher Skeffington and Vice President Roy Sandeman pitched the Norwood opportunity and procured its buyer, while Vice President Andrew Stone arranged the loan after having identified Middlesex Savings Bank in advance as a willing lender. It did not hurt that JCM has an existing relationship with that institution, and the bank came aboard for the newest endeavor. “It worked out all around,” says Spencer, praising loan officers Michael Hart and Jeffrey Kerl for their work on the debt package in addition to TCG’s Stone.

JCM does have about $1 million of upgrades planned at 1400 Providence Highway, including landscaping enhancements and a number of structural issues. Having assisted Calare in boosting occupancy to the brink of full capacity, TCG has been retained as exclusive agent for the park, with Senior VP Rob Byrne leading the charge on that assignment. Accessible to Interstates 93, 95 and 495, Norwood Business Center has a double-digit roster of occupants across a variety of industries, including Tyco Integrated Security, Waypoint and PPI Time Zero, a firm which filled 25,000 sf there earlier this year.

Sandeman lauds Calare for repositioning 1400 Providence Hwy. and he agrees supply conditions are tilted in favor of its new stewards. “Jumbo is well-positioned to benefit from Greater Boston’s thriving flex market,” he says, especially in Route 128 South realm “where the substantial positive absorption of the past three years is expected to continue to spur rental rate growth.” Presently, TCG research puts the average flex market rent at $10.05 per sf for the submarket. That figure has surged 26 percent from Q1 2016, outpacing gains of 14.3 percent in Route 128 North and 19 percent in Route 128 Central, although each of those actually commands a higher average rent of $13.61 per sf and $11.77 per sf, respectively.

According to Spencer, JCM intends to puruse other flex properties which fit their criteria, including a desire for stabilized, cash-flowing assets such as the 100 percent leased 575 University Ave., although he indicates select value-add opportunities will also be considered. “We are really busy,” he reports, including a current deal the industry veteran could not discuss which Real Reporter unveiled last month, that being the pending purchase of 50 Congress St. in downtown Boston. The 180,000-sf office building listed by HFF is expected to trade for over $80 million, and if consummated would represent JCM’s first foray into the Hub.