Merrimack Valley

Housing developer backs out of Osgood Landing deal

Avalon was to build 530 units

By Bill Kirk
bkirk@eagletribune.com
Published: December 21, 2008

NORTH ANDOVER — Osgood Landing, site of the former Lucent plant on Route 125 near the Haverhill line, has just taken another hit.

Avalon Properties, the developer that had planned on putting up 530 rental apartments on 32 acres of vacant land in the northern corner of the 167-acre property, said last week that it has pulled out of the deal.

"We are no longer involved with it," said Scott Dale, vice president of development for Avalon Properties. "We have no formal agreement with Osgood Landing."

Dale said negotiations with Orit Goldstein, who owns the 167-acre property, recently broke down.

"We were trying to put together an agreement that reflects current market realities," he said, confirming that the project was a victim of the housing market collapse and inability to reach an agreement with Goldstein. "Our lack of involvement has nothing to do with the town."

In addition to the impact on Osgood Landing, the breakdown of the development deal is a huge blow to the town.

Town Manager Mark Rees said North Andover has already received $600,000 from the state for approving a zoning change on the property to allow a mix of affordable housing and retail uses. That money is going toward development of a new preschool at the town's middle school.

If the site isn't developed in the next few years, he said the town will have to pay the $600,000 back to the state. But, he added, Goldstein has promised that she would pay that money back if nothing is built there.

Goldstein could not be reached Friday, but said earlier in the week that her primary focus is developing the industrial part of the site, not the residential portion.

News of the housing project's demise comes on top of the departure of the last 10 Alcatel-Lucent employees on Friday. While Alcatel-Lucent's lease at Osgood Landing doesn't expire until the end of January, production at the site has ceased.

That means Goldstein and her commercial real estate officer Ellen Keller have to find tenants for about 1.1 million square feet of the 1.5 million-square-foot complex site. To date, about 400,000 square feet have been leased to a variety of small and medium-sized businesses and public agencies.

"We are going to continue marketing and doing what we can in this incredibly difficult economy," Keller said. "There are not a lot of folks out there looking for manufacturing space."

Project faces long odds

Keller and Goldstein are up against not only one of the most difficult economic downturns in decades, but they are also looking for the kinds of tenants that have fled the United States in droves for the past 10 or 15 years, taking U.S. jobs with them.

"It's not a good story," said Joe Bevilacqua, executive director of the Merrimack Valley Chamber of Commerce. "But it's a story that's playing out across America. As a country, we haven't done enough to keep manufacturing here."

It's a problem Keller and Goldstein both recognize.

Goldstein said she hopes to land a client that makes solar panels, or is involved in some other "green" technology. Keller said they are also wooing big biotech companies.

Whatever company they land, it will likely be a large manufacturing firm, they said, since that's what the space is set up for.

So far, 400,000 square feet of the property are leased to about 30 small- and medium-sized companies or public agencies. The town's Community Development Department takes up 5,400 square feet, while a laser tag company has carved out 18,000 square feet from the manufacturing floor.

Northern Essex Community College runs a tractor-trailer driving school in the parking lot out back, among other programs. There is also a small music school, and Network Allies, a computer company. Ophir Optics, a military contractor, uses 30,000 square feet in the old plant.

Tenants interviewed recently say they like the property, that it's well-run and reasonably priced.

Network Allies moved into a 10,000-square-foot space about a year ago. CEO Jim Reinhold said he was attracted to the property because of the expansion potential. He wants to double the size of his 20-person company every year.

"There's room to grow here," he said. "It's a great location, and hopefully a lot of diverse companies will start settling here."

'A work in progress'

Goldstein has cheerleaders like Reinhold throughout the Merrimack Valley who hope the project is a success.

"It's one of the key locations in town," North Andover Community Development Director Curt Bellevance said. "We've known Lucent was slowly moving out, but we've felt pretty positive about the different businesses we've talked to. ... It's a good site and we're pretty optimistic about the future."

The site is critical to the town, because as Osgood Landing adds new tenants and eventually develops housing and retail on the northern corner of the parcel, property tax revenue will rise. Since 2000, tax revenue from the property has plummeted, from nearly $900,000 to about $250,000 last year.

State Sen. Steve Baddour, D-Methuen, said he and others in the state delegation "will do anything we can to bring that facility back to its heyday. It's just an extremely difficult economy."

Congressman John Tierney, D-Salem, said he is hopeful that Goldstein is successful in bringing a solar-panel manufacturer to the plan.

"I'm high on green jobs," he said, noting that a recently passed bill would train local workers in environmental technology, like how to make solar panels, so that companies looking for a trained workforce would look here first.

Bevilacqua, of the Merrimack Valley chamber, praised Goldstein for remaining resolute in the face of tough odds.

"Orit has done a good job to fill that space, but the space is huge," he said, noting that she has two strikes against her — the economic downturn and the fact that "large companies are no longer available."

"It's a work in progress," Bevilacqua said. "There's been very good cooperation between Orit, the town, the state and the chamber. She deserves a commendation. Who else would take that project on?"

Tax impact of Osgood Landing

YearAssessmentTax payment

2000$49 million$876,120

2001$50 million$787,500

2002$50 million$770,000

2003$37 million$589,040

2004$24 million$318,000

2005$24 million$236,012

2006$20 million$252,506

2007$19.9 million$236,763

2008$18 million$255,864

2009$18 millionTBD