Photo courtesy of Calabrese Capital
Tony Calabrese
President, Hendrie Lane Capital
Industry experience: 21 years
Age: 47
Under its new president, Tony Calabrese, Hendrie Lane Capital is counting on a resurgence of American manufacturing to drive demand for industrial properties in select East Coast markets. Following a career as an infielder in the New York Yankees’ and Mets’ organizations, Calabrese turned to real estate two decades ago and held executive positions at Rockwood Capital and Shorenstein Investment Advisers. In July, he joined his family real estate firm, Hendrie Lane Capital, which was founded by his father James. The company acquired a leased suburban Massachusetts portfolio in September for $43.5 million. Hendrie Lane Capital has an existing portfolio of five apartment buildings and an office building, but now is pursuing an acquisition strategy in manufacturing and R&D properties that have been attracting leasing momentum from growing industries such as clean energy and robotics.
Q: What makes a property like Riverside Drive suitable for your investment strategy?
A: Really well-located off major thoroughfares, from New Hampshire down to Cambridge, where you have a highly educated and skilled workforce. The Greater Boston north suburbs are a really important market for research and development and advanced manufacturing. So we felt like we were buying into the mecca of the makerspaces and the business nodes that were existing. And the tenant base was such high quality. They had chosen to be at these properties. Coupled with our overall thesis that supply chain onshoring is critical to our economy and manufacturing is going to continue to grow in the United States, all those things make the Boston market attractive to institutional investors.
Q: What are the building specifications in this asset category, and barriers to entry?
A: From a tenant perspective, you have to have a building that has dock-high loading, floor loads for manufacturing equipment, freight elevators and power. Those are all critical pieces of physical infrastructure necessary to attract tenants. And these [Andover] buildings have proven that they have the ability to do it. They were purpose-built manufacturing buildings. We weren’t converting an office building to light manufacturing, because that’s really tough to do. The biggest moat around R&D and advanced manufacturing is it’s really expensive to build, so you can buy them at significant discounts to replacement cost.
Q: Which industries are driving leasing in the various markets you’re targeting for acquisitions?
A: The beautiful thing about the sector is there’s always different cycles, and it depends upon what is in vogue at the moment. Batteries, robotics, defense, any kind of tangential AI and data center infrastructure all are driving the market at the moment. But people forget that we have a really vibrant economy, and we’re looking at consumer-based manufacturing.
Q: What effect has the lab space glut had on this sector? Are there opportunities to acquire vacant lab development sites or buildings?
A: First and foremost, cGMP and lab renovations in the northern Boston market took a big chunk of stock that catered specifically to this [advanced manufacturing/R&D] tenant base: the consumer-based light manufacturing tenant. That made the market tighter, and that’s what is driving demand for the existing space.
Q: Are you looking at development or just acquisitions?
A: We’re really looking at a combination of in-place cash flow or a vacancy, where we can add value to bringing in tenants, improving the property through physical improvements. What’s great about a lot of these buildings is once you have the four walls up and the space is open and clear, you can put a lot of different types of tenants: a lot of light manufacturing tenants across different sectors.
Q: Are you planning additional deals with your partners, V12 Investments and The Zaro Group?
A: I’ve known the Zaro family for a long time through a board relationship. And V12, we have a really like-minded thesis. They’ve got great operating capabilities. They own in the market, and it was a great partnership we put together. I can foresee us doing more deals together.
Q: You come from a real estate family?
A: Back then it was kind of the Wild West. In the 1970s and 1980s, [my father] and his partners were able to build a real estate portfolio and get out of brokerage. I wouldn’t necessarily say I grew up with it, but it was always in the back of my mind. [Baseball] taught me a lot about work ethic, and also gave me motivation after I was done to dig in and make something of myself. Not everyone has a backup plan when they don’t make it into professional sports. So I was happy to transition. I spent about six months in my father’s office, just making sure that I wanted to do it. I went to NYU for their master’s in real estate, which was a great program. My first job was at Rockwood Capital, where I covered Boston, New York, parts of Florida and [District of Columbia], and that was a really great experience because they were still small enough at the time we had lots of access to the founders. Being able to talk to them on an everyday basis and learn real estate was invaluable.
5 Favorite Golf Courses Calabrese Has Played in the U.S.:
- Pebble Beach Golf Links
- Friar’s Head
- Winged Foot Golf Club – West Course
- Ekwanok Country Club
- Pacific Dunes
