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Vehicle for Growth?

The Willys-Overland building on Chestnut Street

The Willys-Overland building on Chestnut Street has a proud past, and developers now believe it has an intriguing future as market-rate housing.

Chuck Irving says the property at 151 Chestnut St. in Springfield — known to the well-informed as the Willys-Overland Building because the long-defunct car maker had a showroom on its first floor and a 1,000-car garage above — caught his attention some time ago, after it was damaged and then abandoned after the natural-gas explosion in late 2012.

And he thought it had some potential.

But what really opened his eyes was the rebirth of an almost identical property in Detroit also built by Willys-Overland.

Irving recalled googling ‘Willys-Overland Lofts,’ the name of the housing complex the site was converted into (just as BusinessWest did, and you can) and seeing headlines about relatively small but well-appointed units selling for north of $500,000. And going fast.

“We started reading the articles about the same building in Detroit,” recalled Irving, a principal with Boston-based Davenport Properties. “We went online, looked at the pictures … and it was an incredibly attractive property. And so we started looking at this building, thinking, ‘if it’s structurally sound, this is a great opportunity, because it comes with parking.’”

Indeed, seeing what happened in Detroit and coupling that with what readily appears to be a growing need for market-rate housing as the countdown to MGM Springfield’s opening hits eight, maybe nine months, the Springfield property’s potential soared in Irving’s eyes.

Enough to make the 70,000-square-foot, four-story structure Davenport Property’s latest investment in the City of Homes and the region as a whole. Others include the Springfield Plaza, the Hadley Mall, and the Walmart in Westfield.

“Our company is involved with MGM,” said Irving, noting that the company considers itself MGM’s development partner in Springfield. “And we’ve been watching the employees of the company come into the area, especially the young ones, and looking at their perception of the inventory of available apartments. Through their eyes, it became really clear that there was a need for more market-rate housing in Springfield.”

Whether the Chestnut Street property in Springfield can follow the lead of its twin in Detroit is a huge question mark, one that will hopefully be answered by extensive cost-benefit analysis work in the weeks and months to come, or what Irving called “calibrating Springfield’s market rents with construction costs.”

But he believes the property is certainly a sound investment and that the building will play a key role in the revitalization of the city and especially the area that has come to be known colloquially as the ‘blast zone.’

Kevin Kennedy, Springfield’s chief Development officer, agreed. He said the Willys project, if it develops as Davenport believes it could, might become a catalyst for the blast zone, an area bordered, roughly, by Lyman Street to the north, Dwight Street to the west, Pearl and Hillman streets to the south, and Spring Street to the east.

“There are other investors looking into that area, which we’re calling the ‘next frontier’ in Springfield,” he told BusinessWest, adding that the conditions are favorable for more housing initiatives and related businesses in that zone.

These conditions include everything from MGM and other job-creating ventures in and around downtown to the revitalization of Union Station, just a block or so to the north of the Willys building, to an interest among Millennials and also some retiring Baby Boomers in what Kennedy called “urban living.”

“When you calculate all the jobs that are going to be happening in the downtown and the Springfield area in general, and also take into account the fact that urban living is making a comeback, as well as the growing entertainment options in that area … all these things make this project viable and add up to something good for Springfield,” he said.

A new life as housing would only be the latest chapter in the intriguing history of what has come to be known as the Willys-Overland Block Local Historic District, which was placed on the National Register of Historic Places in 1983.

Built in 1916 as an automobile sales, service, and garaging area, the property became part of what would later be described as an auto-industry legacy in Springfield. Indeed, the Duryea brothers created the first marketable auto in Springfield — there’s a statue depicting their creation near Stearns Square — and Rolls-Royce located a plant in the city to capitalize on its highly skilled workforce.

But Willys-Overland, like the others, did not enjoy a long history in the city. Indeed, it closed its property here in 1921 due to slumping sales, and it has seen a number of uses since.

It was a primarily a parking garage for some of the downtown hotels before they were converted into condominiums, said Irving, and after that, it served as home to a host of businesses, ranging from Square One to a construction company.

These operations were forced out by the gas explosion in late November 2012, he went on, adding that the building was completely gutted and has been vacant, with most of the windows covered with plywood, ever since.

willys-overland-building-union-sept-24-1916

Above, a news story announces the opening of the Willys-Overland building in 1916. At right, the Willys-Overland property in Detroit, which has been transformed into lofts selling for more than $500,000.

Below, a news story announces the opening of the Willys-Overland building in 1916. At right, the Willys-Overland property in Detroit, which has been transformed into lofts selling for more than $500,000.

The previous owner applied for a demolition permit in January 2015, but the city sought and won a delay of that move due to the property’s historic significance.

It was this delay that essentially gave the property a reprieve — time for more progress to take shape in Springfield, time for a recognized need for more market-rate housing to emerge, and, yes, time for the Willys-Overland Lofts project to catch fire — and catch Davenport’s attention.

As noted, the Springfield Willys-Overland property is an intriguing addition to an already large and diverse portfolio of properties in Western Mass.

Perhaps the most visible is the Springfield Plaza, which has undergone an extensive facelift and added new tenants ranging from a trampoline complex to a new home for Springfield’s Registry of Motor Vehicles office, which, said Irving, has brought a significant surge in traffic to the plaza.

The portfolio also includes a retail complex across the street from the Eastfield Mall and what’s known as Davenport Square in Springfield, at the corner of Union and Main streets across from MGM Springfield. The development will include MGM’s daycare facility as well as some retail.

As for the Willys-Overland building, the next steps in the process of writing the next chapter in its history are finalizing designs, crunching the numbers, as noted earlier, and requesting support for historic tax credits, said Irving, adding that redevelopment is dependent on such tax credits and other forms of assistance.

While the reuse plans are still in their infancy, Irving anticipates perhaps 60 units of relatively small size, with a portion of the building to be used for parking.

“It’s got great bones, and it’s absolutely perfect for apartments with the column spacing,” he noted. “What we’re trying to go after is small — really small units for young professionals who don’t want the price of having a big space.

“Our take on it is that it’s a great investment,” he went on. “We’re not certain that the market rents will support the construction costs, and we’re still verifying that. But in the long run, we think Springfield is on the upswing, so whether it’s this year or next year, we’re convinced that this will be a great residential investment.”

As for the blast zone, or Springfield’s ‘next frontier,’ as Kennedy called it, progress has come slow to that area, with the gas explosion now more than five years in the rear-view mirror.

This can be attributed to several factors, he went on, including the slow pace of insurance settlements on many of the properties in the zone (including the Willys-Overland building) and a desire among investors to see how and in what ways Springfield continued its revitalization.

But Kennedy believes the Willys-Overland project could trigger other developments in that area and other housing initiatives as well. And Irving agreed.

“The Springfield market, in our mind, is about to blossom,” he told BusinessWest. “And so, this is a good place to be on the ground level.

“This is a small project at 60 units,” he went on. “If this tests out and verifies that market rates can support new construction, then this will be a catalyst for that entire area.”

George O’Brien can be reached at [email protected]

Commercial Real Estate Sections

Progress in Site

An aerial shot of 70 Turnpike Industrial Park Road in Westfield.

An aerial shot of 70 Turnpike Industrial Park Road in Westfield.

Michael Grossman says his New York-based firm, HMC Real Estate Partners, looks at several hundred properties in the Northeast corridor over the course of a year — at least a few per week, by his estimate.

When asked what prompts he and partners Barry Lefkowitz and Brendan Kolnick to move beyond looking — or well beyond, as the case may be — and make an addition to their growing portfolio of properties, he said there are a number of factors that go into that equation.

These include everything from that time-honored first consideration in real estate — location, location, location — to the condition of the property, the condition of the local market, demand for the type of real estate in question, and a host of other variables.

And every one of those boxes could be checked when it came to a property now marketed as 70 Turnpike Industrial Road, known to most as the National Envelope site, because that was the tenant there for a number of years before it vacated the property in 2015.

“We saw great potential for value creation,” said Grossman. “The project represents an excellent opportunity to turn a non-performing property into a productive asset for the community as well as our investors.”

Elaborating on this potential, Grossman noted that the property is located roughly a mile from Mass Pike exit 3 (you can almost see the highway from the property), and also has rail accessibility. What’s more, it has size (238,575 square feet) and flexibility in that it is suited for both production and warehousing, and is in good condition, especially following more than $1 million in work to the roof, replacement mechanical systems, and more.

Add in a strong market for manufacturing and distribution space, fostered by dwindling inventory, and a city eager to replace the jobs lost when National Envelope left the city, and it’s easy to see why HMC pursued the property and thus greatly increased its presence in the region.

Indeed, this is the company’s second major acquisition in Western Mass. in 2017; the other was the fully leased, 187,840-square-foot warehouse building in the Agawam Regional Industrial Park, home to OMG and Vaupel.

Michael Grossman

Michael Grossman says acquisition of the Turnpike Industrial Park property represents an opportunity to turn a non-performing property into a real asset for the city and the region.

The company also owns a large industrial property in New Jersey, and the portfolio now boasts nearly 1 million square feet of industrial and distribution facilities.

Grossman joined fellow industry veterans Lefkowitz and Kolnick in creating HMC in 2016, with Grossman and Lefkowitz both having left Mack-Cali Realty Corp., a public, multi-billion-dollar real-estate investment trust, to start their own company.

HMC focuses primarily on acquiring multi-tenant industrial and office-flex properties, Grossman explained, adding that the company had developed a strong working relationship with many of the top real-estate-services firms, including Cushman & Wakefield, which put the Westfield property on HMC’s radar and is now its agent.

The company’s principals saw a property that needed some work — there was a considerable amount of deferred maintenance — but also great potential in what would be a new role, that of home to multiple tenants.

And Grossman, as he offered BusinessWest a tour and pointed out its open spaces, high ceilings (up to 36 feet in some portions of the facility), and 12,000 square feet of office space, envisioned up to four tenants.

“We’re looking at assembly, manufacturing, and straight distribution,” he explained. “The building lends itself to manufacturing because of the extensive power.”

The logo created to accompany marketing materials for the property does an effective job of highlighting some of its many assets, especially that strategic location part.

Indeed, curving their way around a large ‘70’ (the street address) are four lanes of highway and some railroad track. The roadway is the Turnpike, obviously, the west-bound lanes of which are less than 100 yards from the back of the property. The railroad track signifies the potential to create a spur that would connect the property to a rail line running through the north side of the city. National Envelope never used rail service, but the potential is certainly there for future tenants to do so, Grossman said.

Potential is a word you hear early and often in reference to this property, and Grossman and his partners are confident that it won’t be long before this potential is realized.

— George O’Brien

Commercial Real Estate Sections

Building Collaboration

The O’Connell Companies has a new home in Holyoke

The O’Connell Companies has a new home in Holyoke (above), replacing the previous headquarters (below) of more than a century.

The O’Connell Companies

The O’Connell Companies traces its history in Holyoke back to 1879, when Daniel O’Connell founded the construction company that eventually branched into property design, management, development, and much more. For more than a century, the company was housed in limited quarters on Hampden Street, but a new headquarters on Kelly Way offers more space, amenities, and opportunities for what one of the firm’s executives called “cross-fertilization.”

In the conference room where Andrew Crystal sat down with BusinessWest recently, the only piece of artwork currently hanging up is a stylized, brightly hued BIM (building information modeling) image of the new headquarters of the O’Connell Companies, located on Kelly Way in Holyoke. On the opposite wall hangs a cutting-edge, multi-screen array for both displaying information during meetings and videoconferencing with other parties.

The room’s long, wooden table, however, is one of the only pieces brought over from the former O’Connell HQ on Hampden Street. The restored table represents some of the connective fiber between old and new that the company wanted its new home to represent, said Crystal, vice president of O’Connell Development Group.

“We’ve managed to incorporate some history,” he said, also referencing a set of century-old, meticulously handwritten balance sheets framed on the wall of another wing, where the accountants work. “The company does have a very long, interesting story, so we tried to preserve some of the history and the culture of the company. That was very important in the design of this.”

Otherwise, the new headquarters, situated on a seven-acre parcel in the woods off Bobala Road, is rife with modern touches, starting with the striking central atrium that connects the wings that house various divisions — O’Connell Development Group, Daniel O’Connell’s Sons (construction), Appleton Corp. (property management), and New England Fertilizer Co. (biosolids management).

The atrium is awash in natural light and features tables and chairs toward the back, along with a kitchen and coffee bar. “We wanted to create some space for people to mingle informally, share a meal or coffee break together, with the intent of getting to know each other and, more important, cross-fertilize, because everything we do is related,” Crystal said. “We design, develop, finance, build, and manage buildings, roads, and bridges — it’s all interrelated for me.”

One of the goals of the new building is to bring together all the company’s divisions under one roof; Appleton previously had its own space on Suffolk Street in Holyoke, while the Hampden Street facility that housed the others had long been insufficient.

“It was an old, tired building, and we had looked at renovating it,” Crystal said. “But, to continue to be a great work environment for present employees, but also with an eye toward the future, it made sense to move to a new location and to have everything under one roof. There’s nothing like being in the same building.”

Dennis Fitzpatrick, president and CEO of the O’Connell Companies, said as much when he addressed hundreds of visitors at a recent open house, noting that it’s been more than a century since the firm dedicated a new headquarters.

Andrew Crystal

Andrew Crystal stands on the walkway overlooking the sunlit central atrium and the woods behind the property.

“When we started this project, our hope was that we could create a modern, contemporary office building where we could more effectively carry out our daily work,” he said. “We wanted improved functionality, a higher level of comfort, and we wanted a few more amenities. We hope that our new headquarters will cultivate a work environment that supports and further develops the spirit and cuture that has made this organization as successful as it has been for as long as it has been.”

For this month’s focus on commercial real estate, BusinessWest paid a visit to Kelly Way to check out the results of that effort.

Forward Thinking

The intent, Crystal said, was to house the company’s various divisions in a modern, energy-efficient, healthy environment. “We wanted to be conscientious about the environment in terms of energy efficiency and how we treated the land when we sited the building and took the trees down. And we wanted to preserve and enhance the corporate culture that exists here, which is why we created this atrium space in the middle of the building.”

He has heard of multiple incidents recently of long-time O’Connell employees meeting in person for the first time, which means the design is working.

“Part of the design is to create space and an environment that encourages people to collaborate and work together between companies,” he explained. “It was also done with an eye toward creating a great workplace for employees — not just the employees we have, but as an incentive to attract younger employees. Things like the atrium and a shared coffee bar, and a fitness room downstairs with showers — these are things that younger workers want, and it’s a competitive environment to attract talent.”

As for the subdued exterior of the building, Crystal said he had a specific vision for how the dark-bricked façade would interact with the woods around it.

“We wanted a brick building, but we wanted something that was more unique than red brick, that was an elegant blend with the surroundings,” he explained. “We went through quite a few designs, looking at various mixes of bricks. We’re very pleased with the result; whether it’s a bright, sunny day or an overcast, rainy day, the building really fits into the surrounding environment.”

The natural light that pours in from the building’s tall windows brings aesthetic appeal as well, but doubles as an energy-efficient element — one of many, he explained. “We chose not to get LEED-certified, but the criteria in LEED buildings drove a lot of the decisions around energy efficiency, water efficiency, quality of the air people breathe, and the views people have to the exterior.”

Dennis Fitzpatrick, addressing open-house attendees

Dennis Fitzpatrick, addressing open-house attendees, said it was “high time” O’Connell’s own home reflected some of the modern design elements it was using in its clients’ projects.

For instance, he continued, “all the light fixtures are LED, and all are on occupancy sensors. We have a high-efficiency boiler for heating, and we have energy-recovery ventilation, so when air is exhausted from the building, we recover some of the energy from the air and reuse it.”

Crystal added that the environmentally friendly focus extended to the outdoors, where the building was positioned in such a way that preserved the more mature trees around its perimeter. The plan is to develop some walking trails through the wooded surroundings by next summer. For now, a large outdoor patio overlooks the grounds behind the atrium. “So if you’re on your laptop on a beautiful day, why not sit outside with the beautiful woods and do your work?”

A freshly installed bocce court is another way to help employees enjoy the outdoors during the warmer months, he added. “Again, we want to encourage people to stay after work and recreate and get to know each other. One of our goals is to create a sense of community among employees.”

Daily Impact

In short, Crystal and his development team — which included architectural firm Amenta Emma and a host of contractors and subcontractors from Western Mass. — are firm believers that a building’s design and environment affect both productivity and employee behavior.

“One goal was to encourage collaboration, innovation, and cross-fertilization,” he said, referring not only to the shared atrium, but formal conference rooms in each wing and the open layout of each division, with offices ringing a shared bank of workstations. Each wing also features a small, private room with a phone for employees in the shared space to make private calls.

A color palette heavy on light grays and whites, with a bold splash of blue ringing some walls, was designed to promote brightness and productivity, and the rainbows that occasionally appear in the glass and white-ash floors when the sun hits the atrium’s huge rear windows is “one of those unanticipated surprises,” Crystal noted.

“People seem happy,” he said. “I think the employees are happy to be here. Having a fun, modern, efficient environment to work in is an important piece of that.”

As the company’s president, Fitzpatrick certainly understands the importance of keeping everyone happy.

“Part of our culture is our people working together to come up with creative, innovative solutions to the challenges and risks that our company faces in our daily business,” he told the crowd at the open house.

“At the O’Connell Companies, we all care very deeply about the details,” he went on. “We care about what happens when plane X meets plane Y. We care about quality, and we care a lot about the feel, the sense that you have when you’re in a building, and I wanted this building to represent that. I wanted it to reflect the kind of quality that we hold ourselves accountable for when we go out and develop, build, and manage an asset for someone else. It was high time that our home reflected some of the ones that we were building.”

As Crystal walked BusinessWest past what’s called the Founder’s Room — a formal conference space on the second floor with a black walnut table built by Jonah Zuckerman of City Joinery in Holyoke — he reflected again on how the company’s history in the Paper City impacts how it does business today, and how its new headquarters fits into that history going forward.

“The real value this company has is its intellectual capital,” he said. “Yes, we own real estate, and we own equipment, but what makes the company unique is its intellectual capital, and by locating all our employees in the same building and actively promoting interactions and collaboration, I think the company benefits. That’s what we hoped to accomplish by relocating.”

Joseph Bednar can be reached at [email protected]