Velocity Venture Partners bought a 195,500-square-foot industrial building in Lawrenceville, N.J.
Velocity Venture Partners continues to grow its reach in New Jersey, paying $12.1 million to acquire a 195,500-square-foot industrial building in Lawrenceville.
The seller, pharmaceutical company Aurobindo, used the building at 2572 Brunswick Pike for manufacturing.
Velocity also has three nearby buildings under contract and plans to close on those properties by the end of the year, according to Tony Grelli, Velocity’s founding partner. While Velocity has bought properties that far north in Pennsylvania, the acquisition northeast of Trenton is the 6-year-old company’s farthest expansion into New Jersey.
While Grelli admitted the Bala Cynwyd firm is “inching a little bit toward the edge of our market” with its latest acquisitions, he said Velocity sees opportunities in the area that are similar to what it has historically taken on.
“We view it as an extension of our market because of the fact that a lot of the tenants that are in that market are the same exact tenants that are right across the river on the Pennsylvania side in Bucks County,” Grelli said. “There’s a lot of spillover between those two.”
Velocity’s 125-building portfolio totals nearly 9 million square feet of space. The company has specialized in buying distressed assets, renovating them and leasing out mostly Class B industrial space. Grelli said Velocity plans to own 10 million square feet by the end of the year.
There’s been a significant amount of new industrial space built in the area around Exit 8A of I-95 northeast of Trenton, Grelli said. The new supply, though, is often Class A space geared toward larger users. That means tenants looking for space between 25,000 square feet and 100,000 square feet have been boxed out of places to rent. That’s the type of tenant Velocity tries to cater to.
“Not only are they priced out of the market, but they can’t find space because no one will demise that small in new availabilities. Very few,” Grelli said. “So we see this as an opportunity to go into a market where there’s really no competition on the Class B side and pick up a great piece of real estate that’s really well located right off Route 1 and right by I-295.”
The Lawrenceville property was originally developed in the 1960s as a manufacturing building for circuit breakers and electrical components. Since it’s most recently been used for pharmaceutical manufacturing, the building is fully climate controlled and has epoxy floors.
It’s unlikely new users would use a similar setup, Grelli said, so Velocity plans to demolish most of the inside of building to start with an open floorplate but keep those key features that could be attractive to tenants. The full renovation, including painting the building’s exterior, paving the 400-space parking lot and updating signage and landscaping, is expected to cost $2 million.
Velocity bought the property for $62 per square foot, which Grelli said is a third of what it would cost to build it from the ground up.
Fortis Education, a trade school, is an existing tenant taking 30,000 square feet. Grelli called Fortis a perfect tenant because the school teaches hands-on technical work, like working on HVAC systems or wiring the frame of a home, that wouldn’t fit well in a traditional office building.
Velocity is working with Avison Young’s Jim Scott to fill the remaining 165,000 square feet.
Grelli said it’s likely the space will be leased to one tenant taking the full remaining space or two tenants that could split it. The space could be used for warehousing or manufacturing.