COURTESY / 43 NORTH
A 1980s-era steel building with good bones but in need of an update fit the bill for 43 North, which worked out a deal with the seller to renovate and lease out space before buying the property.
November 15, 2021
Sale of Sanford industrial building sealed by innovative deal and fast lease
COURTESY / 43 NORTH
Scarborough developer 43 North bought a 95,000-square-foot industrial building in Sanford after full-on renovations and securing a lease for 90% of the space.
A Scarborough developer came up with an innovative strategy for buying an industrial building in Sanford.
43 North bought 1 Eagle Drive from MaineHealth for $1.95 million.
Greg Hastings and Tom Dunham of NAI The Dunham Group brokered the sale.
The property comprises a 95,000-square-foot manufacturing and warehouse building with 15-foot-high ceilings, on 12 acres. It was built in 1981 and the building envelope was renovated, including a new roof, in 2020. The property is located across from the Sanford Seacoast Regional Airport, a 12-minute drive from Exits 19 and 25 of the Maine Turnpike and 1 mile from the Sanford/Kennebunk border. It has 800 feet of frontage on Main Street/Route 109.
“It was a really big industrial transaction,” said Hastings.
The building had fallen into disrepair and its systems were antiquated.
“We were trying to find developers who could redevelop the building,” he said.
Father-son team
Hastings had previously worked with 43 North, an industrial real estate company that focuses on the redevelopment and management of large-scale industrial properties. It specializes in acquiring and renovating vacant facilities. The goal is to take old, underused buildings and bring them back to functional and productive spaces for tenants, according to the company’s website.
The company is owned by father-and-son team Jesse and Bradley Abbott. Jesse has a long-time construction background whose skills are used to manage the contractors and disciplines needed to renovate the acquired buildings. Bradley's focus is on tenant relations and designing spaces that work to fill their needs. The Abbotts started 43 North in 2015.
The 1 Eagle Drive property is the latest — and largest — of roughly 10 projects 43 North has in southern Maine, with 285,000 square feet under ownership and management to date.
“It’s an interesting deal, all in all,” Bradley Abbott told Mainebiz.
COURTESY / 43 NORTH
From left, Bradley and Jesse Abbott.
The property had been on their radar for three or four years.
“It fits our model,” he said.
The company specializes in good-quality, steel buildings dating back to the late 1980s that need repairs and updates, but have good bones and decent-size space.
The pitch
The partners pitched MaineHealth on a deal: MaineHealth would retain ownership and 43 North would come in as managing partner and invest its own money into fixing up the property. MaineHealth would be responsible for property taxes and utilities to keep the building running while 43 North got it ready to lease. After the renovations, and once the building reached 70% to 80% occupancy, 43 North would pay MaineHealth its full asking price.
The project started March 2020. During the first year, renovations on the vacant building included installing a new roof and removing some 500 tons of construction debris from the building.
“We were filling six 30-yard dumpsters per day,” he said. “It’s an amount of material you can’t even fathom.”
Among the installations were LED lights throughout, a new natural gas pipeline, forced hot air heaters and insulation. They cleaned and opened up the space.
Considerable interest
By November 2020, they started marketing space for lease. There was considerable interest, with three to four showings per week and several companies looking to take all or almost all of the space.
Hastings had been working with Biddeford-based Volk Packaging to find additional space for the corrugated and foam product manufacturer. This past summer, Volk signed on as a tenant to take 90% of 1 Eagle Drive in order to establish a new division — Volk Pack.
“We took the building from perennial vacant space in Sanford to 90% leased and 100% profitable at this point,” said Abbott.
Typically, he added, the turnaround from renovations to full occupancy is about three years, and spaces leased are in the 10,000-square-foot to 15,000-square-foot range.
“So the demand for 80,000 square feet was astonishing,” he said.
For Volk, 43 North sealed the concrete floors and renovated several thousand square feet to become office space.
“Volk is officially in,” said Abbott.
Additional renovations will be performed over the coming year. That will include cosmetics such as new paint, awnings, steps and rails. Total investment for renovation is expected to be $1.6 million.
Skowhegan Savings Bank financed the deal and the renovations.
Abbott characterized the property as something of a hidden gem.
“I look at Sanford the same way Lewiston/Auburn is to Portland,” he said. “You get businesses that are priced out of Portland, and the next hub they go to is the Lewiston/Auburn market. There’s no difference between the Lewiston/Auburn jump and the Sanford jump.”
Long-term holds
The company buys properties with the intention to hold for decades.
“We aren’t flippers,” said Abbott. “That doesn’t mean we wouldn’t sell a building. But it changes how you structure it and how you think about everything. For example, we spend a little more to put in energy-efficient heaters and better-quality tile – all these factors that, in the end, create a much better building, because we don’t want to come back in five years and have to replace it.”
The company serves as its own general contractor, which saves 15% to 20% on every project. That translates to solid leases, he said.
“We’re fairly priced when it comes to our base rent and triple net fees,” he said. “It keeps our vacancy rate extremely low.”
With Volk in 85,000 square feet, 43 North will prepare the remaining 10,000 square feet this winter to get it on the market, said Abbott.
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