Objective: To highlight how an entrepreneur has led the redevelopment of one of Massachusetts’ largest former textile mill complex into a vibrant hub for small businesses in a city with one of the highest poverty and unemployment rates in the state.
Major Participants: Lupoli Companies and state and local public agencies.
Background: Lawrence, Massachusetts – dubbed “Immigrant City” – was once one of the country’s leading producers of textiles. In fact, the world’s largest textile mill, American Woolen Company, once called Lawrence home. As the textile industry moved to southern states, the city of Lawrence started to decline. As companies shuttered, the city was left with a number of abandoned buildings, vacant homes and widespread environmental contamination. The Worsted Mill Complex, located along the Merrimack River, was one of the many facilities that sat vacant for more than 20 years. By 2000, poverty in Lawrence was more than double the statewide average, with nearly one-fourth of all residents falling below the poverty level. Median household income was just $27,983, making Lawrence one of the poorest communities in Massachusetts.
How it Happened: In 2003, entrepreneur Salvatore (“Sal”) Lupoli was looking for real estate that could accommodate a commissary to produce the tomato sauce, mozzarella and dough to supply his successful franchise, Sal’s Pizza. Then-Lawrence Mayor Michael Sullivan invited Sal to tour the mill complex along the Merrimack. At that time, the city’s downtown business community had eroded and Lawrence was desperate to attract new investment. Though the mill complex wasn’t a good fit for his commissary – the building they toured had no parking, no roof and was devoid of any other commercial activity – Sal saw its potential. The mills were on the Merrimack river, right off a major highway (Route 495) and there were plans to open a commuter rail station across the street, which would connect residents and businesses directly to Boston, just 30 miles south. In 2004, Sal purchased the first of the mills within the complex, now known as the Riverwalk. His goal was to turn the massive, 3.6 million square foot site into a “live-work-play” environment. While the safest approach would have been to convert the mills into housing, Lupoli Companies instead crafted a deliberate strategy to attract businesses first. Rather than chasing corporate giants, which would put the project at risk if a tenant left, Sal’s team focused on bringing in state agencies, educational institutions, medical companies, energy companies and startups. As an incentive, Sal opened his first sit-down restaurant, Salvatore’s, which offered tenants on-site dining and included a function and conference facility. This strategic move helped Lupoli Companies to draw people to the space and showcase the building.
After realizing great success with the first mill building, Sal went on to buy two more mill buildings on the same site, which would constitute the rest of Riverwalk’s Phase I development. Lupoli Companies renovated as much as was possible and then demolished what was beyond repair. Within five short years, Phase I was complete and the entirely commercial complex remains 95 to 100 percent occupied today.
With Sal’s long-term vision beginning to take shape, Lupoli Companies began Phase II of development in 2007. Sal purchased another adjacent mill, this one about 1 million square feet in size. Developers landed a major tenant, NxStage Medical, Inc., and were able to renovate the mill specifically to the company’s needs. Signing of this lease became a major milestone for Lupoli Companies, as NxStage Medical, Inc. is the seventh largest medical device company in the world, and their 150,000 -square-foot space at Riverwalk became the firm’s new global headquarters—bringing 600 employees with it. During this same time, Solectria Renewables (a 2014 Inner City 100 winner), a female-owned business making solar panels, started to grow out of its space in Phase I. Now, Solectria Renewables was ready for a 125,000-square-foot space and wanted to stay on the Riverwalk campus. With a few major tenants in place, Phase II began to evolve to include more retail space and traditional second floor office space. Soon, the economy would be in the midst of the Great Recession and capital markets were constricting. Sal used this as an opportunity to provide low-cost space to companies of all sizes.
Phase III kicked off in 2011 with Sal’s purchase of The Wood Mill. Clocking in at 1.4 million square feet, The Wood Mill is one of the largest contiguous buildings in the Commonwealth. Plans include both residential and commercial development. By purchasing the $38 million residential component, Sal’s team knew they could finally deliver the real “live-work-play” campus that was originally conceived. There are now 203 apartments on site, and developers are looking to expand to add another 57 apartments. The one- and two-bedroom units are fully occupied; 25 percent of residents already work on the Riverwalk campus. The development includes a new $1.2 million, state-of-the-art fitness facility, which is open to the public but to which Riverwalk residents and tenants receive discounted access. Phase III is still in development, but is approximately 50 percent complete to date.
Results for Local Economy: Riverwalk Properties has grown from just 20 businesses to more than 200 today, including NxStage Medical, Inc., Pentucket Medical Associates, New England Neurological, Cambridge College, Northern Essex Community College and Suffolk University. In strategically targeting companies, the complex provides a harmonious atmosphere for like-minded companies, such as the aforementioned healthcare and educational anchors. The Riverwalk development has resulted in more than 4,000 new jobs in Lawrence, a number that continues to grow as the campus expands. Commercial rents range from the low-teens to low $30,000s, based on the tenant’s needs and build-out packages.
Remaining Challenges: Initially, the former mills were in a state of almost complete disrepair. Getting the project off the ground in earnest required significant investment. Sal had the benefit of leveraging his successful hospitality business as a source of capital. Lupoli Companies also tapped into New Market Tax Credits, historic tax credits and tax-increment financing. A significant MassWorks grant helped to provide much-needed infrastructure investment. As the project continues to unfold, additional capital will be required. For instance, Riverwalk suffers from a lack of parking; the surface lots that were once plentiful are now full. Finding additional parking on-site will be critical to the next stage of Riverwalk’s growth; the developers will either have to sacrifice buildable land for surface parking, or will have to turn to more costly parking solutions – such as an above-ground structured parking.
Despite Riverwalk’s success, the city of Lawrence continues to struggle. According to the U.S. Census Bureau’s 2009-2013 data, more than 29 percent of residents fall below the poverty line, and the $32,851 median household income is less than half the statewide average. Sal continues to see the opportunity in Lawrence and is committed to investing in the city.
Lessons Learned: Lupoli Companies have leveraged public funding to invest in this private project, and in turn, the project has created significant fiscal benefit for the city. Sal has built strong relationships with government leaders and other community stakeholders, who have turned into vocal supporters of the redevelopment project. On another level, Sal oftentimes serves as a community liaison himself—for instance, as companies grow on campus, he connects them to the regional workforce investment board to identify various workforce incentive programs. This customer service approach can certainly be tied to Sal’s own history in the hospitality industry; the high level of service he provides, and his willingness to be nimble with companies’ varying needs has resulted in the transformation of one of Massachusetts’ most blighted areas into a thriving commercial complex today.