Moving north from our last blog on the Hartford, CT, market, we also see that the Greater Springfield area continues to show improvement, largely driven by some traditional drivers of growth — plus a dynamic newcomer.
As always, population and job growth team up to drive demand and rent-growth for multifamily and retail properties. With apartments buildings for sale and under contract in Springfield, Westfield, Holyoke, Chicopee and other Western Massachusetts submarkets, we are seeing increased investor activity over the past year.
Higher education and healthcare have teamed with the growth of existing office tenants to form the foundation for growth. Both local and national tenants provide valuable services and continue to create jobs in downtown Springfield and the surrounding urban markets. Baystate Health Systems, for example, is opening a $45 million emergency room after buying a 34,000-square foot building in the North End for $6.5 million, while the Sisters of Providence Health System has its own $20 million Mercy Medical Center expansion underway. Cooley Dickinson Health, an affiliate of Mass General Hospital, has taken 40,000 square feet of space at the recently completed Northampton Professional Center.
In higher education, Cambridge College has relocated from the suburbs to an 18,000-square foot space at Tower Square, a 28-floor mixed use complex, and the University of Massachusetts has announced that it will take its own 27,000-square feet of space in the same building. Meanwhile, Bay Path College is moving to a 10,000-square foot campus at 1350 Main Street in downtown Springfield, and Holyoke Community College recently completed converting a 22,000-square foot facility on Jarvis Avenue in Holyoke into a high-tech health science center for its nursing and radiological technology program.
Massive downtown projects also bode well for Springfield’s health. The MGM Resorts International-backed casino in the South End and the planned Union Station renovation in the North End together represent almost $900 million in investment in Springfield. The Springfield casino project has drawn interest because it is the only Western Massachusetts casino planned.
As these various projects come online in the Western Massachusetts submarkets, we anticipate continued rent-growth for multifamily assets and a degree of cap rate compressions as investors bid up the values of these properties. That said, value-add opportunities continue to be a favorite for investors with the ability to reposition and/or lease-up historically under-managed properties. Fortunately, the Springfield-area submarkets abound in such value-add opportunities.
With offices in Connecticut, New York and Massachusetts, our investment sales teams are well positioned to support commercial real estate investors looking at opportunities across the region. If you’re a property owner or an investor in the mid-market segment and want to discuss this blog or your investment goals and how we can help you achieve them, please give us a call.