Mass. firm's $160M bet on southern New Hampshire follows groundbreaking work of in-state developers

Oct. 16—DURHAM — Masquerading as a high-energy game-show host, comedian Juston McKinney coaxes contestants to scramble to win cash in New Hampshire Lottery commercials filmed in the same cavernous building that's been used to host student robots and stage SWAT training.

The building's owner is hoping for his own payout.

"They took all the lottery games and did like a human version of them," recalled Brandon Kelly, president and CEO of R.J. Kelly Co. Inc., a commercial real estate company based in Burlington, Mass.

Halfway up the vast building's mezzanine, "they had people in this giant inflatable ball where they rolled down," Kelly said.

Kelly's company is climbing high in the Granite State, investing more than $160 million on real estate in southern New Hampshire since last year.

"I don't know of other folks who have invested in the order of magnitude that we have," Kelly said while touring the half-million square foot building on Technology Drive near Route 4.

The building, which sits on more than 170 acres, cost his company $21 million last year. It was originally home to Goss International, manufacturer of printing presses and related technology.

R.J. Kelly's holdings include 22 properties purchased since 2020 from the families of Sam Tamposi and Gerald "Jerry" Nash, who during the 1960s and '70s attracted companies from out of state, primarily from Massachusetts, with available land and new buildings in southern New Hampshire.

Tamposi is credited with drawing Digital Equipment Corp. and Anheuser-Busch to the state, according to his obituary.

"They just created a snowball that led to the development of southern New Hampshire," said Dan Scanlon, senior associate broker at Colliers, a commercial real estate firm. "They were giants in what they did, and there is nobody today that is doing the same thing."

The draw of NH

New Hampshire had a lot of factors that attracted interest.

"It's workforce. It's highway networks. It's the amount of commerce. It's the amount of businesses," and it's the availability of space, Kelly said. "When we started investing in southern New Hampshire, we spent a tremendous amount of time studying southern New Hampshire."

In 2021, "we ramped up significantly," he said.

R.J. Kelly's New Hampshire holdings consist of about 35 properties totaling 2.5 million square feet, and purchase and development costs of about $250 million.

The 20-plus properties purchased since 2021 stretch from Amherst to Durham in eight communities, according to information compiled by Kristie Russell, research manager for New Hampshire and Maine at Colliers. They totaled more than $160 million.

The company's new Nashua tenants include an Amazon delivery facility and the Boston Billiard Club & Casino.

In May 2021, R.J. Kelly bought the former Walmart property on Colby Court in Bedford for $8.1 million and recently sold it to Wire Belt Company of America, which outgrew its space in Londonderry.

Scanlon said Wire Belt bought the old Walmart for $13.5 million. Kelly said Wire Belt handled its own renovations.

"It's a very highly commercial piece of real estate zoned industrial in a market that has no availability," Kelly said. "If you look around in southern New Hampshire, if you look around in northern Massachusetts, you would not find a building like that."

R.J. Kelly, founded in 1951, employs about 80 people, including 15 who live in New Hampshire. The firm does everything from acquiring properties to constructing, leasing and managing them. It hires outside architects.

The company operates in five states and has more than $2 billion in assets under its management.

Tenants for Durham

A pile of construction debris greeted recent guests entering the main entrance of the building on Technology Drive, where the NH Lottery commercials were filmed.

Gone are the walls that defined office and cafeteria space in the 36-year-old building.

"So when you have a building like this that's an older building, that really has not had the sort of TLC that you need to make it an exciting place, you sometimes do a bit of speculative demo work," Kelly said.

The University of New Hampshire rents almost 10% of the building. A distribution company is temporarily occupying another 120,000 square feet of space.

Kelly, using different colors to draw on his digital tablet, sliced and diced potential uses for the vacant space.

"We bought this building with the intent of either repositioning the building or building a new building here, building an additional building here," Kelly said.

In its current state, the building is six times the size of the new Market Basket in Concord.

Engineers and others already are doing their due diligence on a nearby hilly area that could be the site of a new building.

Winter would be the earliest he might submit plans to the town for approval.

"Two years from now, that could be built," he said.

But construction costs could price the building beyond $75 million or $100 million, depending on its size.

"We're not going to speculatively build a building of that magnitude," Kelly said. "In this market at this point in time, the world the way it is today, it's not something you would do speculatively. That could change."

Companies looking for a million square feet would need to travel far from the Seacoast.

"You've got to go way into western Mass. or further west into northern New Hampshire and Vermont to get anywhere close to what you can do here, and you don't have access to the population and the workforce, especially in a business-friendly state like New Hampshire, so there's a very strong value proposition for a lot of options here," Kelly said.

The existing building could house several tenants, but they need to be credit-worthy and constitute the right mix.

"If you're going to commit to somebody long-term, you've got to make sure that they can actually pay the rent," Kelly said. "If you're going to significantly invest in the building, you've got to make sure you're going to get a return on your investment."

R.J. Kelly works with eight or nine active joint ventures or partners, said Rick Griffin, a partner and the company's chief investment officer.

Kelly said more American companies want to move their operations back to the United States.

"We've had a lot of companies from all different size ranges, all different industries, a lot of them are U.S. manufacturing companies that all want to do something pretty significant here," Kelly said.

Company execs say they are patient to land the right tenants.

"Ideally, you'd want to lease the whole thing. But if you start to break things up, it's a little bit of a puzzle," Griffin said.

Tamposi-Nash legacy

When Samuel A. Tamposi died in 1995, former U.S. Sen Warren Rudman told The New York Times that Tamposi "brought more jobs to New Hampshire than all of the economic authorities in all of the state's cities and townships put together."

Tamposi and Nash "were Nashua folks with a lot of open land," said Steve Duprey, a hotel developer and a former state Republican chairman.

"The New Hampshire Advantage consisted of Sam and Jerry Nash convincing Massachusetts businesses they'd be much better off within New Hampshire with our tax structure and responsive regulatory environment," Duprey said. "That New Hampshire Advantage remains. There's no question they were the pioneers who started that."

Tom Farrelly, an executive at Cushman & Wakefield, a commercial real estate firm, called Nash and Tamposi "visionaries" who attracted businesses to New Hampshire.

According to Scanlon, R.J. Kelly in recent months bought several properties totaling around $90 million from the Tamposi family.

"It's multi-generations," Kelly said, "and now I think this generation is getting older, and I think they're looking to retire."

Sam Tamposi Jr. and Debra Nash didn't return messages left at their offices.

"With all of the stuff that we're buying, I think you're going to see our presence in New Hampshire for a very long time," R.J. Kelly's Griffin said. "They owned that real estate very well. They took great care of it, and we're excited to be the next stewards of those assets for the next few generations."

What about Brady Sullivan?

The state's biggest developer today is the tandem of Arthur Sullivan and Shane Brady.

Their company, Brady Sullivan, owns the state's two tallest office buildings, along with the former Jefferson Mill, the company's headquarters in Manchester.

Sullivan said he doesn't recall going up against R.J. Kelly for a property for sale, and didn't want to speculate on which company was bigger.

"I don't necessarily keep score in terms of the dollar volume," Sullivan said. "I always say there's room enough for all of us to do business in the state."

Kelly said he didn't know how much Brady Sullivan's holdings totaled.

"They've been here a while, and they've done real well," Kelly said.

Scanlon said he considers the two companies to be different animals.

"I view them much more as an investment company than a development company," Scanlon said of R.J. Kelly.

"It's really different kinds of holdings. Brady Sullivan has the office towers," Scanlon said.

The big picture

Most people are hoping to win millions of dollars — not thinking of investing such sums in buildings.

The New Hampshire Lottery took advantage of the Durham building's 47-foot-high ceilings.

"This particular building was chosen because we needed a space to produce this creative (series of commercials) that was large enough to house three, exceptionally large set designs, as well as to provide proximity for the production crew (Big Brick Production) and the New Hampshire Lottery," said lottery spokeswoman Maura McCann.

The 15- and 30-second spots were filmed last December. They began airing in February and continue to air today.

"We're constantly trying to find new, creative and innovative ways to interact and engage with our players," McCann said.

Meanwhile, the building's owners got a little payout.

The lottery paid $20,000 to rent the space for four days.

What's Working, a series exploring solutions for New Hampshire's workforce needs, is sponsored by the New Hampshire Solutions Journalism Lab at the Nackey S. Loeb School of Communications and is funded by Eversource, Fidelity Investments, the New Hampshire Charitable Foundation, Dartmouth-Hitchcock Medical Center, the New Hampshire College & University Council, Northeast Delta Dental and the New Hampshire Coalition for Business and Education. Contact reporter Michael Cousineau at mcousineau@unionleader.com. To read stories in the series, visit unionleader.com/whatsworking.