Visible Progress

High-profile Ludlow Mills Project Takes Big Steps Forward

Kenn Delude hadn’t seen — or heard — anything quite like it, and he had been in the industrial-park development business for more than 30 years by then.

It was the time just before, during, and since the Great Recession of 2008, and in some respects, it’s still ongoing.

“It was painfully slow,” Delude, president of Westmass Area Development Corp., recalled, looking back (although he alternated between the past and present tenses) on that time when the phone literally didn’t ring for weeks and sales of industrial-park parcels were extremely few and very far between. “I’ve seen many downturns in the economy, but nothing as broad-based as that, nothing that severe.”

But it was at the height of this development drought that Westmass started putting together the most ambitious project in its 52-year existence — redevelopment of the sprawling Ludlow Mills complex in the center of that community. And despite the hardships and the realization that the slump would continue into 2014 and probably beyond, the Westmass board never wavered in its pursuit of the mill property, said Delude, and for two very good reasons.

The first was the realization that, eventually, the development climate would change and there would once again be demand for land and space in which companies could expand, he said, noting that, while Westmass and Westover Metropolitan Development Corp. have adequate supplies of property at the moment, both organizations must think decades out. The second reason was that the mills provided a unique opportunity for Westmass to do something groundbreaking — in both a literal and figurative sense.

“Strategically, this was a decision made by the board to take on a brownfield project, to get involved in a community, and obviously get involved and deal with the issues concerning preservation,” he explained during an interview in the Westmass office within the complex. “Overall, we wanted to create a model for property like this that could be used elsewhere or inspire other parties such as municipalities to take on something like this.

“We have countless mills throughout our region, and they’re located, like this one, by beautiful rivers,” he continued. “They have prime locations from many perspectives, but they’re underutilized, or they’ve fallen into disrepair.”

Westmass is roughly 18 months into what will probably be at least a 20-year endeavor to redevelop the mills and fill the adjoining 170 acres of greenfield property. But already there is a good deal of momentum, despite the still-sluggish economy.

Indeed, the steel is due to be delivered within days for the next phase of construction of a new, $27 million HealthSouth rehabilitation hospital on a parcel in the center of the mill complex. And in conjunction with that project, plans are being developed for the first stage of a riverwalk that will connect the site with the nearby Chicopee River in ways that could promote further development. Meanwhile, plans are moving forward for a senior-housing complex to be created in what’s known as Mill 10.

At the same time, the phone has actually started to ring again in the Westmass office, said Delude, noting that there has been interest expressed in some of the larger green parcels within the mill complex.

And in another development that is expected to create still more momentum, the project was recently included in the third round of funding for the state’s Brownfield Support Team (BST) initiative. Launched in 2008 by Lt. Gov. Tim Murray, the BST brings together local, state, and federal agencies to help advance and accelerate redevelopment efforts involving brownfield sites.

Such designation has triggered progress at both the former Uniroyal site in Chicopee and the former Chapman Valve complex in Indian Orchard, said Delude, adding that BST involvement will bring needed resources and expertise to the matter of readying sites for future new construction or reuse.

“This gives us access to a team that can help us understand and perhaps deal with some of the challenges a developer and a community face when trying to redevelop property like this,” he said. “You have very stringent energy codes and greenhouse-gas analyses, and goals you’re trying to achieve, and, at the same time, you’ve got historic-preservation regulations to contend with. There are a number of issues to address, and these consultants can help us find answers.”

For this issue and its focus on commercial real estate, BusinessWest takes an in-depth look at the Ludlow Mills project and how a picture is starting to develop across the vast, blank canvas it represents.

 

Milling About

As he talked with BusinessWest about the mill project — something he’s done on several occasions since it was first put on the drawing board in 2009 — Delude said it does many things for Westmass.

For starters, it gives the agency an immediate, and always welcome, revenue source.

Indeed, the agency is now a landlord and property manager, collecting rent from nearly three dozen tenants. This additional income, especially at a time when the many business owners are still hesitant about taking on new construction and the cost of such work is considerably more than retrofitting existing space, provides the agency with needed stability.

Meanwhile, it also provides much greater diversity, he said, noting that, in addition to developable, often shovel-ready land that is currently not in high demand, Westmass now has former mill property in its portfolio, and it comes in many shapes and sizes, and with myriad potential uses. The development corporation also gains needed acreage for larger-scale projects, and even 6,000-square-foot stockhouses — dozens of them were used to store raw materials at the jute-manufacturing complex — that could serve effectively as incubator facilities for startups and next-stage companies.

“That’s an interesting market because it’s very expensive to build a 6,000-square-foot facility — there are no scales of economy working for you, and it’s often difficult for a developer to create a parcel and dedicate the needed frontage for a 6,000-square-foot building,” he explained. “So this gives us the mechanism to attract and capture businesses that need such a facility and help them grow.

“The perfect scenario would be to have someone as a lease tenant,” he continued, “and as they became successful and grew, they would be able to build new at Ludlow Mills on another location. There would be a natural continuity there, and people wouldn’t have to leave the area, or even the community, to grow.”

All this, or at least much of it, was envisioned by Delude and the Westmass board as the Ludlow Mills acquisition started to take shape in the midst of that deep downturn that Delude described.

Retelling the story of how this project came to be, Delude said the nearly 1.5 million-square-foot mill complex was once the very heart of Ludlow’s economy — so much so that the clock tower at the corner of one of the mills has become the unofficial symbol of Ludlow, used on the town seal as well as the masthead of the weekly Ludlow Register.

After the mill operations shut down, the complex became home to a host to a number of businesses across several sectors, including manufacturing and distribution. The maze of buildings and adjacent undeveloped land, totaling more than 1,000 acres, caught the attention of Westmass officials as they scouted opportunities to expand the agency’s reach, portfolio of developable land, and roster of business opportunities.

Delude acknowledged that the project is seemingly far removed from the agency’s primary business model — creating, marketing, and, eventually, filling business parks (it now has five across Hampden and Hampshire counties) — but is firmly in keeping with the Westmass mission of creating opportunities for economic development in the region.

 

Building Momentum

The vast potential of the Ludlow Mills for creating different kinds of development opportunities is driven home by the first two announced projects for the site.

One is a $20 million plan forwarded by WinnDevelopment to build 83 units of senior housing on four floors of what’s known as Mill 10, built in 1907. It represents one of many forms of possible reuse of an existing structure, said Delude, adding that this proposal also meets a recognized need for such a facility in Ludlow, and thus presents an opportunity for many long-time residents to continue living in that community.

The second project, the new HealthSouth rehabilitation hospital, is new construction, and represents an opportunity for Westmass and the mill complex to enable a business to expand and stay within the region or, in this case, in the town of Ludlow itself.

“We wanted to stay in Ludlow, but at the same time we knew we couldn’t stay here,” said HealthSouth president Scott Keen, referring to the old Ludlow Hospital, which currently houses his facility and is only a few hundred yards from the mill complex. “From a business perspective, if you’re in a town that’s supported you for many years, and the community supports you, and you’ve had a successful business, it makes no sense to do anything but try to find a way to stay, and that the mill gave us an opportunity to do.”

Elaborating, he said the complex provided the acreage and the location the growing venture needed to take an operation inconveniently spaced over five floors of the old community hospital and move it to a facility with nearly 20,000 additional square feet all on one floor.

Moving forward, Westmass wants to create more of both types of development opportunities, said Delude, adding that the mill complex offers the size, flexibility, and existing facilities to meet almost any need.

To prove it, he went to a large, aerial photo of the complex, complete with blocks of yellow designed to show what could potentially be built in certain areas of the parcel.

For example, the area around the site of the new HealthSouth facility is suitable for buildings 10,000 to 40,000 square feet in size, while the greenfield further to the east is suitable for buildings of 60,000 to 150,000 square feet. Meanwhile, those aforementioned stockhouses can accommodate smaller ventures, and the existing mill structures can house a wide range of business and residential ventures.

“The broad goal for us is to be as flexible to the market-driven demand as possible,” said Delude.

And this is where the potential to create a working model for other communities and development agencies to emulate comes into focus, he continued, adding that there are similar mill complexes (although not as large) across the state that present the same set of challenges and potential opportunities.

“When we met with legislators on Beacon Hill to discuss funding for this project, there were a number who identified with this project and the challenges and were encouraging us to forward, because they had their own mill experiences,” said Delude, referring to officials from Haverhill, Lawrence, and other former manufacturing centers.

This connection, coupled with the large scale of the project, were certainly factors that led the Ludlow initiative to be chosen for assistance from the Brownfield Support Team, he went on, adding that the technical support from the BST will help facilitate and accelerate efforts to make the site ready for the various kinds of development it can support.

Meetings with the team will commence later this month, he went on, adding that the expertise provided by team members may help remove some of the potential roadblocks to the development, specifically the need to balance historic-preservation efforts with increasing demands — both at the legislative level and within the business community — for buildings that are energy-efficient.

“These buildings were built in the early 1900s — they’re energy-inefficient by nature,” said Delude. “For the first time, the Department of Energy Resources will be on a round of Brownfield Support Team intiative projects, and they’re interested in use of renewable energies and sustainability, and that hits the sweet spot with us and these older buildings.”

 

Progress in Site

Delude said the high-profile nature of the Ludlow Mills project brings with it a certain amount of pressure to succeed, but overall, the fact that high-ranking state officials, including Gov. Deval Patrick, are watching this project is a very positive thing.

“They want us to succeed, and they’re giving us the tools to succeed,” he said of state officials. “If there is any pressure, it’s internal to ourselves; we want to succeed, and we want to do it as quickly as possible, but there is a natural process that has to take place, and it starts with infrastructure, and it starts with preparing for the development that we’ve modeled and that we hope to achieve.

“We have a lot of people behind this project and enthusiastically supporting this project,” he went on, adding quickly, “it would nice if the economy would support it as well.”

It will — eventually — but even now, the sluggish times are not enough to dampen enthusiasm for a project that promises to be historic on a number of levels.

 

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