In 2021, business was continuing to grow at a rapid pace and Newcastle Systems had outgrown their 18,000-sf facility in Haverhill. The company needed to expand to service its customers more efficiently, which presented a number of challenges.
Challenge 1: Lack of Inventory
The market for an industrial building that fit Newcastle’s requirement of 40 -60,000 sf with 20-foot clear height in close proximity to the Ward Hill Industrial Park in Haverhill was very tight, with a vacancy rate of 3.7% in the Haverhill/Lawrence and 2.7% in the Amesbury/Ipswich submarkets.
Solution: Newcastle engaged Nordlund Associates to find the new facility utilizing their extensive database of contacts which resulted in identifying an off-market opportunity that matched the requirement previously non-existent in the open market: a 37,500 sf warehouse with 22’ clear height and expansion possibility in Amesbury, Ma.
Challenge 2: Seller needs time
In order to make the transaction work for the Amesbury property owner, additional time was required to relocate its own business.
Solution: Nordlund negotiates a leaseback of the property for six months following the closing.
Challenge 3: Newcastle needs to sell quickly to raise equity for new purchase but remain in place for 6 months until new property is vacated.
Solution: Nordlund Associates aggressively marketed Newcastle’s Haverhill facility and identified a Buyer for the 18,000-sf building within a week of marketing for a record valuation for a building of this type in the Ward Hill Industrial Park Market. A six-month leaseback of the Haverhill facility was negotiated, which was critical until Newcastle could occupy its new Amesbury facility.
Challenge 4: High sale price causes Capital Gains Tax for Newcastle.
Solution: Nordlund advised Newcastle on the benefits of an IRS 1031 Exchange which allowed it to defer the large capital gains tax it would have incurred.
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