Grwoth from existing firms

Grwoth from existing firms

Brush, Cassandra Hemenway

Commercial real estate appears to be stable, although a few areas of the state have more vacancies than local development officials would like, but overall there’s been incremental expansion of industrial sites and a slight increase in demand for office and retail space. In Chittenden County, demand for commercial real estate has exploded (see related story).

Central Vermont

Space is tight in Central Vermont, where some long-vacant properties are getting filled, and a few new industrial sites are under construction.

Central Vermonters will soon see the long-desolate “Harry’s” department store building occupied, located in Berlin on Route 302 (aka The Barre/Montpelier Road). The Vermont Lottery will occupy part of the space, with another 50,000 square feet available for rent.

Growing businesses have sparked expansion, said Richard Angney, executive vice president of Central Vermont Economic Development Corporation. For example, Green Mountain Coffee Roasters is adding a 62,000-square-foot building to its Waterbury facility. And Blue Cross Blue Shield of Vermont just finished construction on a 40,000square-foot office building on its Berlin site.

Cabot Creamery is building a 60,000-square-foot distribution facility in Montpelier on Gallison Hill Road. Cabot is also negotiating a lease of a 30,000-square-foot facility in the Wilson Industrial Park in Barre Town.

Waitsfield’s engineering firm, Northern Power Systems, has a new 28,000-square-foot building for research and development, said Angney. The former Salt Shed building in Stonecutters Way will soon be renovated for office space as well as for the Pyralisk Theater.

Walker Motors is also expanding its show room in Montpelier.

“We don’t have a lot of excess space right now,” said Angney “That’s a good thing. … There is demand for space. It’s a matter of fitting people with the space.”

For example, Angney said often a business needs only about 10,000 square feet when what’s available is 50,000 square feet. Perhaps that’s why two major retail spaces have remained vacant this year, both on Route 302 in Berlin: the former Grand Union, and the former Ames department store.

Waterbury has been seeing a lot of demand for retail space, including several small businesses that recently moved in. Northfield hasn’t had a lot of space available, said Angney, but the federally funded Center for Counter Terrorism and Cyber Crime has grown and appears to be bringing in new business to the community there.

Northern Vermont

Much of development in commercial real estate in Vermont’s northeast is speculative. There’s a lot of interest, a few leases signed, but still a lot of empty retail and commercial space waiting to be filled.

While northern Vermont continues to face challenges with commercial real estate, there has been “a spate of interest” in the last quarter, said Steve Patterson, Executive Director of the Northern Vermont Development Association St Johnsbury office.

Patterson said that three of NVDA’s four industrial parks one on the St Johnsbury/Lyndonville town line, the others in Hardwick, Orleans and North Troy – have attracted interest.

“In the last three or four months, there has been more interest expressed than in the prior six months,” Patterson said.

NVDA itself just finished building a 23,000-square-foot “incubator” building, which will be a training ground for start up businesses. Two leases have been signed for that building, and another “is about to be signed.”

Vermont Quality Stitching provided the latest good news story for Vermont’s Northeast Kingdom. It changed hands over the past year, during which time it more than doubled its original number of employees.

When the sewing company closed its Morrisville subsidiary in 2003, one of its New Hampshire customers called NVDA looking for a similar factory in the northeast that could service her company “Wild Things.” When she found out there weren’t any comparable businesses, she decided she would buy Quality Stitching rather than let it close.

“It shut down with 20 or 30 employees,” Patterson said. “Within three or four weeks it was up and running at full employment. Now there are 70 employees.”

But that’s about all the good news for the Northeast Kingdom.

“From a general perspective,” said Patterson, “There’s a lot of space available. … We’ve got some challenges. There’s a lot of open storefronts.”

The New England Composites building is available, as is office space. Some “open holes” on St. Johnsbury’s.

Main Street need filling with retail businesses. But, on the up side, some buildings are getting renovated, including the former Aubuchon building on Railroad Street. Aubuchon relocated to Route 5. Its former site will be refitted and available for retail on the street level, with housing on the upper floors.

Patterson remained upbeat about commercial real estate in the NEK.

“Generally, I think there’s a surprising amount of activity and interest, in the commercial side of the Northeast Kingdom. There are certainly some challenges we need to face, but there’s also a lot of opportunities.”

West

Unlike the Northeast Kingdom, Addison County has a dearth of available commercial space, according to James B Stewart, Executive Director of the Addison County Economic Development Corporation. Space is tighter, and as in Central Vermont, growth has occurred in existing companies which ate expanding.

“In the last couple of years, the economy didn’t warrant signs of expansion, said Stewart. “Though a handful of companies did grow, which is typical of this kind of economy. Some businesses have found a niche.”

Agrimark, for example, has substantially increased its Middlebury facility within the last few years, upgrading its refrigeration and whey processing capabilities.

“It has greatly increased its capacity for manufacturing,” said Stewart, “but it hasn’t really resulted in a lot of new jobs. Effectively, a lot of the equipment companies are investing in automates, so expansions and sales do not generate new jobs.”

In an unusual move for Vermont which has seen a number of companies move manufacturing overseas in recent years Specialty Filaments, Inc consolidated all of its operations to East Middlebury, where it manufactures bristles for everything from brooms to Oral B toothbrushes. Stewart credits the move to the workforce here.

“(Specialty Filaments) made some improvements to their facility here, and over time they have plans to do more,” he said.

The Middlebury Industrial Park still has 50 acres available for development, as does a 45-acre private site called Vermont Industrial Parks. Middlebury’s defunct A&P, and closed Kmart will now house a Hannafords and a TJ Maxx, filling up an empty niche in the area.

Addison County’s major downtowns – Middlebury, Vergennes, and Bristol are all benefitting from citizens! groups dedicated to keeping vibrant Main Streets and historic character. Bristol has ‘had some difficulties” due to limitations of wastewater treatment in the village, but a new National Bank of Middlebury in its downtown has helped anchor the town’s commercial district, Stewart said.

In sum, “We haven’t seen any real change in the cost of anything,” said Stewart. “Commercial real estate values have potentially dropped a little in the last couple years, but companies located here are doing well … because of the lower cost of business.”

Office space is tight in Addison County, Stewart reported. He said there’s 1,000 to 2,000 square feet of office space available “here and there” but otherwise there’s not enough demand to warrant development office buildings.

However, Redstone Groups has developed Catamount Park, a 10-acre parcel located within the Middlebury Industrial Park. Primarily offering office spaces, the site has been leased to existing businesses who are simply relocating to the park, Stewart said.

Oddly, Rutland is seeing the opposite phenomenon with office space. Rather than too little, Rutland has too much.

“We are absolutely vacant,” said Rutland Economic Development Corporation’s Executive Director Bill McGrath. “Most of it is in second, third and fourth story space … we just don’t seem to do it in the second and third floors, so there is a lot of office space for people who want to go up a little.”

Industrial space, however is at a premium in the Rutland area. Like its neighbors to the north, growth in the Rutland area has been coming in the form of expansions of existing companies.

“Right now I am working with 11 companies thinking of expanding their existing facilities and all of them can do it on the land they have,” McGrath said. “That’s the only trend, and I believe it’s going to be short term.”

Examples of the expansion trend are: Kalow Technologies looking at a 14,000-square-foot expansion; Knight Cabinets looking to expand 12,000 square feet, Hubbardton Forge is adding a 27,000-square-foot addition to its building; and High Pond Woodworking is adding about 30,000 square feet.

Industry has seen its share of turnover in the Rutland area, especially when Tambrands – the manufacturers of Tampax closed two years ago after remaining there 30 years. Jack Barret bought the property and subdivided it. Now several smaller companies occupy the space.

When Moore Business Forms closed its 150,000-square-foot plant, the linen distributor Foley Distributing and the bulk mailing service Metro Mail moved in.

“(Industrial real estate) is moving at a fair pace,” summarized McGrath. “It’s not setting the world on fire, but it is moving.”

East

Somewhat mirroring other communities in Vermont, Randolph is seeing growth, but mainly from a “slow game of musical chairs” within its existing business community, said Executive Director of the Randolph Area Community Development Corporation, Jeremy Ingpen.

Brooks Pharmacy just completed a “major refit” of the former P&C supermarket on Main Street. Local developer Jesse Sammis acquired the former Brooks property, and “substantially renovated” the 11,000-square-foot area, although it’s not yet released for retail rental.

RACDC is building a $3 million 23,000-square-foot office building on the site of the former village school, said Ingpen. The property has been preleased to Dubois & King, which will move into town from its site a few miles down the road. Vermont Technical College will manage the former D & K site as a “business incubator.”

Waterbury Companies closed its plastic molding facility in December 2003. The 63,640-square-foot facility still hasn’t been filled, although Ingpen reports a couple of “possibilities.”

When Ethan Allen moved its furniture manufacturing plant to China, it left a 180,000-square-foot facility open. Green Mountain Wood Products has moved in. They are looking to sublease the 60,000 square feet of the plant which they don’t use. The former Grain Mill farm supply store has been bought and renovated by its new occupants Century 21 Millstone Agency within the last quarter, said Ingpen.

Ingpen reports “low vacancy” for both retail and office space, despite the two renovated Main Street buildings that have yet to be filled.

He said commercial space averages around $10 a-square-foot, not a significant increase.

Perhaps Ingpen’s take on the Randolph area applies to much of Vermont these days – where expansion appears to be coming from existing companies, and local businesses are moving around within their communities.

“What I really see is a lot of people investing and putting their money into pieces of property and retrofitting the buildings. It looks pretty healthy to me.

Copyright Boutin-McQuiston, Inc. Apr 01, 2004

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