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Pioneer Valley Business 2014: Medical expansion injects life into real estate market



Thursday, February 27, 2014
A few contours in the Valley’s real estate landscape, 2014:

• Competition in the health care industry is fueling demand for medical space in Northampton, with office buildings being built and quickly leased.

• In Easthampton, the city’s active role in the redevelopment of old mill buildings through infrastructure improvements ensures space for artists to live and work.

• The significant college student population in Amherst, with many University of Massachusetts students seeking accommodations off campus, drives the need to provide alternative housing options.

Though these communities are reacting to different needs, they share the sense of an economy getting back on track, with few empty storefronts in the downtowns and a number of projects either planned or underway to help bolster the tax bases.

Northampton Mayor David J. Narkewicz highlighted economic development in his January inauguration speech. Cumulatively, 13 projects he identified have a property value of $88 million, feature 203,000 square feet of new office space, 73 housing units, 83 assisted-living units and 110 hotel rooms, which will provide $1.26 million in direct revenues to support city services.

“We’re obviously pleased and excited about it,” Narkewicz said.

Nowhere is Northampton benefiting more than from the needs of health-care providers. “We’re seeing the results of increased competition in the health-care sector,” Narkewicz said.

On King Street, Northampton Crossing is a 70,000-square-foot conversion of retail space at the Hill & Dale Mall into medical offices for Baystate Health.

Atwood Drive’s business park, where two 40,000-square-foot office buildings are completed, is leased to Cooley Dickinson Hospital, and another 80,000-square-foot building is in the planning stage, with the possibility of a new 100-room hotel and restaurant to replace the Clarion Hotel and Conference Center.

Fazzi Associates, a home health care agency that does medical coding, is doing so well, Narkewicz said, that it relocated from King Street to the 16,000-square-foot commercial building called Gatehouse at the entrance to the Village Hill development.

A medical marijuana dispensary is coming to a former Pro Brush manufacturing plant in Florence, the result of zoning changes to ensure existing former industrial buildings get reused and don’t stand vacant, Narkewicz said.

The range of developments in Northampton is diverse, in part because it has become a destination.

This includes the 110-room Fairfield Inn under construction on Conz Street. “We view that as a major development,” Narkewicz said. “Creating new hotel rooms benefits our tourist economy.” More rooms also means an increase in local motel and hotel taxes.

Business outreach

The pride in economic development and the boost to the local economy is showcased at City Hall, where artist conceptions of some projects adorn the hall outside the mayor’s office.

Terry Masterson, the city’s economic development director, reaches out to developers to interest them in relocating to Northampton.

For instance, Masterson recently worked with owners of a glass-blowing studio, collected a list of all sites they would want to see, got an understanding of their budget and had them speak to bankers to try to match them to properties they could afford. They also met with representatives of the Business Improvement District and the Greater Northampton Chamber of Commerce.

“We are proactive and receptive to those who want to relocate here,” Narkewicz said.

The $3 million worth of drainage improvements for neighborhoods surrounding the Three County Fairgrounds will allow the fairgrounds to move forward with the next phase of new stables and increase capacity for events. “That is viewed regionally as an important project,” Narkewicz said.

Masterson said 130,000 people attend the annual Labor Day fair, 60,000 go the Paradise City Arts Festival events and 17,000 attend the Morgan horse shows. The city attracts about 500,000 visitors a year, Masterson said.

Patrick Goggins, president of Goggins Real Estate, said what is happening in Northampton shows that commercial real estate throughout the region is healthy.

“I’m sensing banks are becoming more willing to help those with entrepreneurial aspirations realize their dreams,” Goggins said. “There’s a renewed sense of life in the commercial end of real estate.”

Goggins said demand is being filled on King Street and that this was helped by the city straightening out zoning along that stretch.

Country Hyundai, part of the Cosenzi Auto Group, and Lia Kia, are opening where the former Kollmorgen plant was located.

Narkewicz said the city modified the zoning, recognizing that King Street is not monolothic, providing increased economic development that fit into the aesthetic of the city.

“I do think the city recognized the zoning needed to be updated, so it moved forward on that,” Narkewicz said.

In Easthampton

Just as zoning changes aided commercial development in Northampton, Easthampton is finding its own ways to support the business community.

City Planner Jessica Allan said public funds can be used to promote private investment, something that is happening with the six mills on Pleasant Street, four of which are a mix of commercial and residential uses.

The city and businesses joined forces to get public funds for infrastructure improvements, including new water lines and burying electrical lines, that will begin this spring and should be complete by the end of June.

This is being funded by the second phase of a $4.25 million MassWorks grant and includes 404 new parking spaces on the southern side, between the mills and Manhan Rail Trail.

“By having 400 additional parking spaces, that will allow them to attract more clients and build out their buildings,” Allan said.

This includes Mill 180, where Allan anticipate more “live-work” units will be available for artists. The Eastworks, Brickyard and Paragon mill buildings all have more space available for retail and residential uses.

Allan said since most of these are pre-permitted, they are ready to attract new businesses.

Another public project is the Nashawannuck Pond boardwalk, with the city obtaining a $400,000 Parklands Acquisitions and Renovations for Communities grant from the state. This will improve the business climate downtown.

Allan believes public dollars are used well if they spur private development.

Another project at 184 Northampton St., where an old motel is being converted into a mix of offices, is indicative of the ongoing redevelopment of underutilized parcels, she said. “In Easthampton, we don’t have a ton of vacant land left,” Allan said.

This project is similar to what occurred at the Button Building at 119 Union St. downtown, which was renovated last year and now has three of its four floors filled with tenants.

There is a trend of smaller businesses locating and filling empty storefronts, especially along Main and Union streets. Allan said this may be attributed to Easthampton being more affordable than Northampton. “A lot of what we’ve been seeing is small businesses moving into the downtown,” Allan said.

In addition, designating Cottage Street a cultural district and attracting arts-based entities downtown has benefited the community.

With no new subdivision plans filed in the past two years, housing is primarily focused on new affordable units. This includes Parsons Village, where 38 units will be built by Valley Community Development Corp., and 15 Cottage St., where the old Dye Works building will have 50 affordable units in the heart of the city.

In Amherst

Amherst’s proposed developments are focused mostly on meeting the demands of college students seeking to live off campus.

Some mixed-use projects are planned, but because zoning changes haven’t been fully implemented, buildings can’t be as dense as they might be in the village centers.

Still, Town Manager John Musante said he is optimistic.

“Trying to concentrate that growth into the village centers is completely consistent with the master plan,” Musante said.

Ground-floor professional space in mixed-use buildings and more collaborations with UMass and Amherst and Hampshire colleges for incubator space could boost the local economy.

One effort town officials point to is Kendrick Place, a five-story project at the intersection of Triangle and East Pleasant streets that could break ground in the spring. This will have 26 apartments on the upper floors and three retail stores on the ground level.

There are also residential and commercial projects on West Street in the Pomeroy village center, Ronald Laverdiere is adding a new building to the Amherst Office Park, and on Cowls Road, W.D. Cowls president Cinda Jones is building the Trolley Barn, with a ground level that will be filled with a restaurant and possibly retail and two upper levels, likely to be apartments, unless she can find office tenants.

Jones said she would prefer to build projects that increase density in village centers.

“Zoning reform is critical for Amherst’s real estate market viability,” Jones said.

The current projects reflect the master plan and continued rezoning efforts coming before Town Meeting.

“There’s a real sense of momentum about village center redevelopment,” Musante said.

Olympia Place will provide additional taxable student housing. That five-story building will house more than 200 students and has already been permitted. And while it has proven controversial, the Retreat in the Cushman section is moving ahead, with plans expected to be filed by May.

These projects illustrate that, while real estate slumped in the region, it did not affect Amherst as much, Musante said, because Amherst is home to three institutions of higher education. “That helps to enhance property values and also acts as a stabilizer on property values,” he said.

A few contours in the Valley’s real estate landscape, 2014:

• Competition in the health care industry is fueling demand for medical space in Northampton, with office buildings being built and quickly leased.

• In Easthampton, the city’s active role in the redevelopment of old mill buildings through infrastructure improvements ensures space for artists to live and work.

• The significant college student population in Amherst, with many University of Massachusetts students seeking accommodations off campus, drives the need to provide alternative housing options.

Though these communities are reacting to different needs, they share the sense of an economy getting back on track, with few empty storefronts in the downtowns and a number of projects either planned or underway to help bolster the tax bases.

Northampton Mayor David J. Narkewicz highlighted economic development in his January inauguration speech. Cumulatively, 13 projects he identified have a property value of $88 million, feature 203,000 square feet of new office space, 73 housing units, 83 assisted-living units and 110 hotel rooms, which will provide $1.26 million in direct revenues to support city services.

“We’re obviously pleased and excited about it,” Narkewicz said.

Nowhere is Northampton benefiting more than from the needs of health-care providers. “We’re seeing the results of increased competition in the health-care sector,” Narkewicz said.

On King Street, Northampton Crossing is a 70,000-square-foot conversion of retail space at the Hill & Dale Mall into medical offices for Baystate Health.

Atwood Drive’s business park, where two 40,000-square-foot office buildings are completed, is leased to Cooley Dickinson Hospital, and another 80,000-square-foot building is in the planning stage, with the possibility of a new 100-room hotel and restaurant to replace the Clarion Hotel and Conference Center.

Fazzi Associates, a home health care agency that does medical coding, is doing so well, Narkewicz said, that it relocated from King Street to the 16,000-square-foot commercial building called Gatehouse at the entrance to the Village Hill development.

A medical marijuana dispensary is coming to a former Pro Brush manufacturing plant in Florence, the result of zoning changes to ensure existing former industrial buildings get reused and don’t stand vacant, Narkewicz said.

The range of developments in Northampton is diverse, in part because it has become a destination.

This includes the 110-room Fairfield Inn under construction on Conz Street. “We view that as a major development,” Narkewicz said. “Creating new hotel rooms benefits our tourist economy.” More rooms also means an increase in local motel and hotel taxes.

Business outreach

The pride in economic development and the boost to the local economy is showcased at City Hall, where artist conceptions of some projects adorn the hall outside the mayor’s office.

Terry Masterson, the city’s economic development director, reaches out to developers to interest them in relocating to Northampton.

For instance, Masterson recently worked with owners of a glass-blowing studio, collected a list of all sites they would want to see, got an understanding of their budget and had them speak to bankers to try to match them to properties they could afford. They also met with representatives of the Business Improvement District and the Greater Northampton Chamber of Commerce.

“We are proactive and receptive to those who want to relocate here,” Narkewicz said.

The $3 million worth of drainage improvements for neighborhoods surrounding the Three County Fairgrounds will allow the fairgrounds to move forward with the next phase of new stables and increase capacity for events. “That is viewed regionally as an important project,” Narkewicz said.

Masterson said 130,000 people attend the annual Labor Day fair, 60,000 go the Paradise City Arts Festival events and 17,000 attend the Morgan horse shows. The city attracts about 500,000 visitors a year, Masterson said.

Patrick Goggins, president of Goggins Real Estate, said what is happening in Northampton shows that commercial real estate throughout the region is healthy.

“I’m sensing banks are becoming more willing to help those with entrepreneurial aspirations realize their dreams,” Goggins said. “There’s a renewed sense of life in the commercial end of real estate.”

Goggins said demand is being filled on King Street and that this was helped by the city straightening out zoning along that stretch.

Country Hyundai, part of the Cosenzi Auto Group, and Lia Kia, are opening where the former Kollmorgen plant was located.

Narkewicz said the city modified the zoning, recognizing that King Street is not monolothic, providing increased economic development that fit into the aesthetic of the city.

“I do think the city recognized the zoning needed to be updated, so it moved forward on that,” Narkewicz said.

In Easthampton

Just as zoning changes aided commercial development in Northampton, Easthampton is finding its own ways to support the business community.

City Planner Jessica Allan said public funds can be used to promote private investment, something that is happening with the six mills on Pleasant Street, four of which are a mix of commercial and residential uses.

The city and businesses joined forces to get public funds for infrastructure improvements, including new water lines and burying electrical lines, that will begin this spring and should be complete by the end of June.

This is being funded by the second phase of a $4.25 million MassWorks grant and includes 404 new parking spaces on the southern side, between the mills and Manhan Rail Trail.

“By having 400 additional parking spaces, that will allow them to attract more clients and build out their buildings,” Allan said.

This includes Mill 180, where Allan anticipate more “live-work” units will be available for artists. The Eastworks, Brickyard and Paragon mill buildings all have more space available for retail and residential uses.

Allan said since most of these are pre-permitted, they are ready to attract new businesses.

Another public project is the Nashawannuck Pond boardwalk, with the city obtaining a $400,000 Parklands Acquisitions and Renovations for Communities grant from the state. This will improve the business climate downtown.

Allan believes public dollars are used well if they spur private development.

Another project at 184 Northampton St., where an old motel is being converted into a mix of offices, is indicative of the ongoing redevelopment of underutilized parcels, she said. “In Easthampton, we don’t have a ton of vacant land left,” Allan said.

This project is similar to what occurred at the Button Building at 119 Union St. downtown, which was renovated last year and now has three of its four floors filled with tenants.

There is a trend of smaller businesses locating and filling empty storefronts, especially along Main and Union streets. Allan said this may be attributed to Easthampton being more affordable than Northampton. “A lot of what we’ve been seeing is small businesses moving into the downtown,” Allan said.

In addition, designating Cottage Street a cultural district and attracting arts-based entities downtown has benefited the community.

With no new subdivision plans filed in the past two years, housing is primarily focused on new affordable units. This includes Parsons Village, where 38 units will be built by Valley Community Development Corp., and 15 Cottage St., where the old Dye Works building will have 50 affordable units in the heart of the city.

In Amherst

Amherst’s proposed developments are focused mostly on meeting the demands of college students seeking to live off campus.

Some mixed-use projects are planned, but because zoning changes haven’t been fully implemented, buildings can’t be as dense as they might be in the village centers.

Still, Town Manager John Musante said he is optimistic.

“Trying to concentrate that growth into the village centers is completely consistent with the master plan,” Musante said.

Ground-floor professional space in mixed-use buildings and more collaborations with UMass and Amherst and Hampshire colleges for incubator space could boost the local economy.

One effort town officials point to is Kendrick Place, a five-story project at the intersection of Triangle and East Pleasant streets that could break ground in the spring. This will have 26 apartments on the upper floors and three retail stores on the ground level.

There are also residential and commercial projects on West Street in the Pomeroy village center, Ronald Laverdiere is adding a new building to the Amherst Office Park, and on Cowls Road, W.D. Cowls president Cinda Jones is building the Trolley Barn, with a ground level that will be filled with a restaurant and possibly retail and two upper levels, likely to be apartments, unless she can find office tenants.

Jones said she would prefer to build projects that increase density in village centers.

“Zoning reform is critical for Amherst’s real estate market viability,” Jones said.

The current projects reflect the master plan and continued rezoning efforts coming before Town Meeting.

“There’s a real sense of momentum about village center redevelopment,” Musante said.

Olympia Place will provide additional taxable student housing. That five-story building will house more than 200 students and has already been permitted. And while it has proven controversial, the Retreat in the Cushman section is moving ahead, with plans expected to be filed by May.

These projects illustrate that, while real estate slumped in the region, it did not affect Amherst as much, Musante said, because Amherst is home to three institutions of higher education. “That helps to enhance property values and also acts as a stabilizer on property values,” he said.