The Time Is Now

Ken Vincunas says that speculative development, or 'spec' building, as known, always comes complete with a degree of risk.

The practice, which involves building new office, warehouse, retail, or manufacturing space without a primary tenant signed on the dotted line, usually involves more doubts and question marks than most developers are willing to take on, said Vincunas, president of Development Associates, a company that builds, develops, and manages properties.

The economy could change, individual business sectors, such as technology, could take a nosedive, and the region's inventory of available space could change suddenly and without warning, said Vincunas, listing all the reasons why spec building isn't done much anymore. But he gauged all those factors and managed to convince a group of partners to move forward with such a project in the Agawam Industrial Park.

Known unofficially as 630 Silver St., the project is actually phase 2 of a development started in 1985, and involves tile last undeveloped lot in the Agawam park. Construction has begun on a 25,000-square-foot structure intended to house one or more tenants.

Vincunas acknowledged that there is always risk with such a project, but the signs he saw indicated that this was a good time to proceed.

"The rates are low, and prices are going up all the time," he said of the decision to proceed with construction now, as opposed to later. "Meanwhile, the inventory of buildings with comparable location and amenities is minimal, and there are a number of signs that the economy is picking up. So we decided to go ahead with a pure spec building.

"Not many people are doing this anymore - we're mavericks in a way - but I think this is going to pay off in the long run," he continued. "Sometimes, people don't have enough vision to tease a place that doesn't exist, so you have to show them something, and we are."

Vincunas, who represents the second generation of his family to run the development company, said it has kept a low profile over the years but has established a reputation as a problem-solver for companies that don't want the hassle or expense of owning real estate. It currently leases space to the first tenant in the Chicopee River Business Park and has more than 1.1 million square feet of production and office space in its portfolio.

The company doesn't own any property, but builds and then manages facilities for a group of owners that includes his own family, the founders of the O'Leary Company, a South Hadley-based general contractor, and the Shumway family, which operates the Hampshire Hospitality Group.

This group bought the last remaining lot in the Agawam Industrial Park several years ago and has waited patiently for the proper time to proceed with a development. Last summer, Vincunas convinced the owners that the time was now, Ground was broken in November, and the shell of the building - to he custom-fitted to suit tenants' needs - is nearly completed.

He envisions no more than four tenants, and says they could cross a wide range of sectors - office, warehouse, manufactuing, or service.

Vincunas is aggressively marketing the property, using print ads in a number of area real estate publications, the company's Web site, flyers that have been sent to hundreds of prospective tenants. and other tactics. There has been significant interest expressed, he said, but no firm commitments yet, although he expects some soon.

"Leasing is a little tough these days because interest rates are so low and a lot of people can afford to build a building," he said.

"But not everyone philosophically wants to own - they may have a corporate mandate to lease or they don't have a long horizon, or they want to grow and don't know how long they'll be in the space they have today. So leasing still makes sense for a lot of people."

So much sense. in fact, that Vincunas and the partners he represents are already looking at a second, similar spec project at Westover, one that the group could break ground for by fall.

For now, however, Vincunas is clearly focused on the Silver Street initiative, which boasts an attractive location, solid neighbors, and competitive rates.

"It's very difficult to find an industrial park location these days; there's very little space left," he said. "We figured there was strong demand from people who want a central location and a mature industrial park, and that's why we went ahead."

Time will tell if this gamble pays off, but for now, Vincunas believes this is a pretty safe bet.