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May 15, 2020 REAL ESTATE & CONSTRUCTION

Adam Winstanley covers his assets

Winstanley’s retail holdings are feeling the pain, but for bioscience and industrial the future is bright.
By Michael C. Bingham

One of southern New England’s most successful developers and property managers is weathering the same unprecedented economic headwinds as the rest of the business world. But his company’s diversified commercial real estate portfolio affords him an uncommon perspective on what developing and managing major industrial, bioscience and retail projects may look like in the post-COVID “new normal.”

Adam Winstanley, co-principal of Winstanley Enterprises, sat down this week for a (virtual) “armchair conversation” with the Connecticut/western Massachusetts chapter of the Society of Industrial & Office Realtors (SIOR).

With his brother Carter, Adam Winstanley runs the Concord, Mass.-headquartered company his father David founded in 1973. Winstanley Enterprises LLC also has offices in New Haven and Hartford and employs about 60 workers in the three locations.

SIOR chapter president Art Ross, senior managing director of the industrial practice group for Newmark Knight Frank in Avon, introduced Winstanley  as “one of the most active developer/investors in New England, owners and operators of several million square feet of space in most asset classes” of commercial real estate. (Specifically, that’s 27 buildings totaling some 13 million square feet.)

The company has also forged a notable presence in the Southeast with the development of a 319,000-square-foot retail center, Page Field Commons, in Ft. Myers, Fla.

Winstanley has become a transformative figure in New Haven, responsible for the $200 million 100 College Street bioscience development (informally known as “the Alexion Building” although its anchor tenant relocated its corporate headquarters to Boston almost two years ago).  It represents the first phase of the city’s multi-year Downtown Crossing redevelopment project that aims to revitalize and reconnect the center-city commercial district with the medical district and Hill neighborhood.

Winstanley’s portfolio is built primarily on a three-legged base of life sciences/medical, warehousing/logistics and retail. Besides shopping centers in Manchester, Chelmsford, Mass. and Florida, the retail portfolio includes 23 freestanding Stop & Shop supermarkets totaling 1.5 million square feet in Connecticut, Massachusetts and Rhode Island that Winstanley closed on in December.

That acquisition “has turned out to be a pretty good investment,” Winstanley said, as the supermarket sector has surged during the COVID pandemic selling essential supplies to homebound consumers. He added that Stop & Shop just recorded its all-time monthly sales high in March.

Retail gets wrecked

The other elements of Winstanley’s retail portfolio “have not performed very well” since the coronavirus crisis began in early March, he acknowledged. “Retail has really taken it on the chin.” Retail tenants in Winstanley’s Chelmsford Town Center had their rent payments deferred for March and April and are able to cover operating expenses only, he said. Tenants in Manchester’s Shoppes at Burr Corners have mainly had to defer rent payments for the time being, Winstanley said. The company’s “power retail” facility in Ft. Myers is performing well in less hard-hit Florida, he added.

“The approach on retail for us has been looking at each situation individually,” Winstanley explained. For example, Marshall’s, whose stores in the Northeast have been closed, is not paying rent in May, and paying half rent for June and July, he said, while Dick’s Sporting Goods is paying half rent in Florida for the time being. “Each tenant has approached the workout separately, trying to understand what their needs are,” Winstanley said.

“We have made a business decision to extend the [payment] plank out to our retailers with the hopes that we can keep them as a viable tenant by giving them free rent [in March and April], and then half-rent for some period of time until they can start generating sales again,” Winstanley said. Grocery stores and pharmacies are the lone bright spots in retail for now. “It’s tough going because landlords have expenses and mortgages to pay, so not everybody has the ability to defer rent” for tenants, he added.

The picture is brighter in Winstanley’s industrial and life science/medical portfolio, which totals a combined 8.5 million square feet, mostly in Connecticut.

“As of now [May 13] we have not missed any rents in the industrial portfolio across the board,” Winstanley said. He acknowledges that, industry-wide, “Some tenants are trying to pile into bad news to beat up landlords” for deferrals or outright rent forgiveness.

Most of the activity in the sector is in e-commerce, Winstanley said, “and tenants are scrambling to add footprint in that category.”

And in Winstanley’s bioscience/medical portfolio of about 1.1 million square feet, “We have not missed any rents, either,” he said.

Pending final city approvals, construction will begin this August on a new structure across the street from 100 College, bearing an address that doesn’t yet exist: 101 College Street.

While the $250 million project is still navigating through the city and state permitting process, Winstanley said the 500,000-square-foot 101 College Street “is approximately 65% pre-leased, we have arranged our financing on the project, and it’s slated to start construction in August,” he said.

Architect’s rendering of Winstanley’s planned 101 College Street project (center), with existing 100 College Street behind it.

Also scheduled to begin construction in August is a 500,000-square-foot $45 million warehouse project in Enfield with an anchor tenant already lined up, he added.

That’s about $300 million in Connecticut projects scheduled to break ground within a couple of months.

Big picture, “I think retail is going through a structural change,” Winstanley said. “Amazon is accelerating the demise of retail. Amazon is going to wipe out [grade] B and B-minus [retail] centers in this country, but every market will still have a top-performing retail asset. I don’t believe that people are just going to be hanging out at home buying things online.”

So what will smart money gravitate in the post-pandemic world?

“Industrial without a doubt is the star performing asset class,” said Winstanley. “As retail contracts I think you’re getting a proportionate growth in industrial.” He especially sees smaller industrial buildings close to population hubs being in very high demand in the near future.

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