Real estate brokers get an up-close look at the North Country

When Jim DeStefano visited northern Coos County recently, what he saw was “a lot of big, empty available buildings,” along with a “quality available work force” for any employer that wants to venture that far north.

DeStefano, of Grubb and Ellis Coldstream Real Estate Advisors in Bedford, was one of 21 commercial and industrial brokers taken by the state’s Department of Resources and Economic Development on a bus tour to see first-hand the land, buildings and business opportunities available north of the White Mountains.

Among the sites that impressed him was a brand-new 7,500-square-foot manufacturing plant in Colebrook, built on spec, with the hope of drawing one or more manufacturers to the site.

“It was a nice facility,” DeStefano would later recall, “it was just way up north.”

“They have the labor force up there, and the land is less than 50 percent of what you’d pay on average in southern New Hampshire,” said Ronald Grolljahn of the Granite Commercial Group in Bedford. “You can get industrial land in Berlin for 10 percent of what you could get it for at an industrial park in Manchester — as little as $5,000 an acre, believe it or not.”

Space in the Berlin area can be leased for as little as $2 to $3 per square foot. “Here we start at $6.25,” Grolljahn said. Yet the Bedford broker recognizes the challenge of filling vacant space in the remote and economically distressed areas of New Hampshire’s North Country.

“I’ve got eight buildings in the center of town,” said Grolljahn, who leases surplus properties for Rite Aid throughout the state. The drug store chain had purchased the adjoining properties, covering a city block, with the idea of building a superstore in the center of Berlin. That plan was canceled when the paper mills closed two years ago.

“They had all the buildings appraised and the appraisals came in 50 percent lower than what they paid for them,” said Grolljahn.

Smaller spaces

hough the mills reopened last year with a reduced work force (550 employees, compared to 850 at the time they closed), other industrial properties in the city remain empty. One is the former Bass Shoe property, a 108,000-square-foot structure that has been vacant for nearly a decade, said Norm Charest, the city’s economic development director.

“The problem is I’ve had two or three companies almost locate there, but we keep bumping into the ceilings,” said Charest, noting most manufacturers need more height than the Bass building, with its 10-foot high ceilings, affords.

There is the possibility that the state’s Department of Health and Human Services will move its local offices into the building, Charest said, leasing 12,000 to 14,000 square feet. Meanwhile the Berlin Industrial Development and Park Authority is planning to renovate a portion of the former GAMM Stitching Plant and lease 3,000 of the building’s 22,000 square feet to a small machining company. If all goes according to plan, there will still be plenty of industrial space for lease in Berlin.

“Not all companies need to have this huge space,” said Charest, “and they don’t want to pay for a large space.”

Location issues

In Colebrook, the town and its economic development agency built the 7,500-square-foot spec building in the town’s industrial park with grants of $1 million from the federal Economic Development Agency and another $1.5 through a Community Development Block Grant. The building itself cost $350,000, with the remainder going for water and sewer improvements.

The project was completed two years ago, and while the building is still empty, there have been several inquiries about it during the past year, said Benoit “Beano” Lamontagne, president of the Colebrook Development Corp.

The need to have space available became apparent several years ago, Lamontagne said, when Guitabec, a Canadian manufacturer of guitars, was looking for a site in Colebrook.

“They needed to be up and running in 60 days,” Lamontagne said, and the town had nothing to offer. The company wound up going to Berlin.

“It was disheartening to think, ‘There goes 60 jobs and there’s nothing we can do about it,’” said Lamontagne. “It was the fourth time in a row we had people interested in coming into Colebrook and we had no room for them.”

These days, Colebrook has the opposite problem. The former Manchester Manufacturing building, last occupied by Bonneville, a door and window manufacturer from Canada, remains empty, and the town is hoping to at least partially fill its 180,000 square feet. But bringing in new businesses is always a challenge for small communities at long distances from the nearest population center.

“Depending on who you’re asking, that’s an issue,” said Lamontagne. “There are some people who will look at the fact that, draw a circle around Montreal, Boston and over to Portland, Maine, we’re pretty much right in the middle.”

“There’s certainly available space,” said Peter Riviere, executive director of the Coos Economic Development Corp., “but 180,000 square feet is a little intimidating to some people. Our future probably lies in attracting a lot of smaller businesses with people who like the lifestyle, the atmosphere, the work ethic, the community spiritÉ.We’re all savvy enough to know no major employer is going to come in with 400 jobs and be our savior.”

Labor pool

The bus ride also took the brokers to Whitefield, where an airport and rail connection were highlighted, along with a wood-to-energy plant capable of providing current and future tenants of the Whitefield Industrial Park with electricity at below market rates. Stops also were made at the industrial parks in Colebrook and Berlin, as well as at the Berlin airport, with its 5,000-foot runway and 100 acres of land available for industrial use.

Much of the talk was about the area’s labor pool.

“The key part of that market is that there are people doing jobs that are less than what they are qualified for,” said Mike Bergeron, one of the DRED officials on the tour.

Many workers with manufacturing skills and experience are working at jobs in the tourist industry for relatively low pay and benefits, he said. While wages tend to be lower in that part of the state, “We’re not looking for companies to come to northern New Hampshire who can’t pay competitive wages,” Bergeron said. But the comparatively “low occupancy costs” can be a key factor, he said.

“If they can either purchase or lease a building at a competitive rate, that makes them more competitive in their market segment and they can pay competitive wages.”

“I’ve even called a couple of my investors and told them they ought to take a hard look at some of those properties up there,” said Wilma Willson of Verani Realty in Derry. “It might take five to seven years before they get a return, but they wouldn’t be able to touch anything down here — the prices are too damn high.”

“You never know what’s going to come across your desk in commercial real estate,” said DeStefano, summing up the purpose of the trip.

The more than 400 commercial and industrial brokers in New Hampshire are “pretty much in the front lines of economic development in this state,” he said. “It’s important for people in the front lines to be able to recognize opportunities up in the North Country. With that knowledge bank, we might be able to surface that kind of opportunity with some of the companies we’re running into.”