TripAdvisor’s new Needham headquarters.
The Route 128 is corridor headed for a new golden age, the likes of which we haven’t seen since the 1980s, when it was known as “America’s Technology Highway.”
Rents in Greater Boston’s marquee suburban lab and office market have hit highs not seen since the dotcom stock bubble of the late 1990s, while the amount of new construction and renovation work is soaring, a new report by JLL shows.
In fact, what’s happening now on 128 arguably beats both those 1980s glory days, which ended with an epic real estate bust, as well as the frenzied real estate deal-making during the dotcom bubble of the late ’90s.
The 128 market is hot again, but not crazily so. And it’s an expansion built to last, with a wider range of companies leading the way, as well as a fuller and deeper real estate lineup that includes things like restaurants, shops and apartments.
“As someone who worked in the dotcom bubble, they had pockets and pockets of money, but they didn’t have a product to deliver,” recalled Matt Daniels, suburban brokerage chief for JLL’s Boston office. “We [now] have established companies that are looking to grow here.”
Asking rents in the Route 128/Mass Pike market jumped nearly 7 percent in the first quarter and are up more than a whopping 18 percent for the year, JLL reports in its first-quarter market survey. The current asking rent of $36 a square foot along the 128 corridor is the highest since 2000, the firm notes.
And rents are poised to soar even higher as we get deeper into 2016, with 383,000 square feet of new office space set to come online this year at an average asking price of $48 a square foot. That’s about what it cost to rent Class A space just a few years ago in the Financial District.
The amount of vacant space in the 128/Mass Pike market is also impressive, having stayed below 10 percent, even as a massive amount of new office and lab space comes online, JLL reports.
But while the numbers are certainly surging again, what makes the new 128 boom arguably superior to those of days gone by is the range of companies doing the expanding. It’s not all about a few big defense contractors and mainframe computer giants, as it was in the ’80s, or exuberant startups, as it was in the late 1990s. Rather, today’s real estate boom on 128 is being driven by myriad life science and technology firms, as well as host of other, more mainline companies who depend on these sectors – especially tech – for services.
Sustainable Growth
On the tech side, TripAdvisor has just finished settling into its new headquarters just off 128 in Newton, with solid business prospects that would put any of those old dotcom flashes in the pan to shame.
In Waltham, the central hub of the 128 real estate market, Wolverine Worldwide, Clarks USA and ThermoFisher Electric are gearing up to move into spacious new corporate digs. The trio of build-to-suit projects at 10 CityPoint, 1265 Main St. and 130 3rd Ave. will expand the 128 market by more than half a million square feet.
Meanwhile, life science development is also hitting new heights, with more lab space along the 128 corridor than anywhere else in Massachusetts other than Kendall Square. Yep, that includes Longwood and the Seaport in Boston, two fast-growing hubs for life sciences firms.
Anchor Line Partners is pushing “The Post” – a 400,000-square-foot project named after the former postal service distribution center that once stood on the Waltham site – to both office and lab users.
In Burlington, long Waltham’s rival to be top dog of the 128 market, EMD Millipore is building a 280,000 square foot complex that will open next year.
The 128 corridor’s clusters of tech and life science companies are also attracting other big corporate giants who rely on these sectors for services. Verizon, for example, is on the hunt along 128 for 150,000 square feet of design and engineering space to develop some of its newest products.
But it’s not just all about fancy new corporate suites and spiffy new labs. This time around we are seeing restaurants, shops and apartments take shape along the 128 corridor alongside the office space and labs, create a distinctive urban feel in what has long been a suburban market.
University Station is combining hundreds of new luxury apartments with offices and restaurants in Westwood, while Nordblom Co. has spent hundreds of millions of dollars redeveloping Burlington’s Northwest Park, creating a “restaurant row” as well as a new Wegmans.
Stealing a page from Nordblom’s plan, National Development has turned the old New England Executive Park into The District, marketing a new office project with floor-to-ceiling glass windows that looks like its right out of downtown Boston.
As a broker who survived the dotcom bust, Daniels says he much prefers the new-and-improved 128 real estate boom to earlier incarnations. While having companies throw money around and sign leases within a week was fun, it wasn’t exactly all that sustainable.
“This market feels more mature,” Daniels said. “It’s not five guys in a pickup truck with $100 million looking for 100,000 square feet of space.”
Editor’s Note: A previous version of this article referred to the mixed-use development in Westwood by its former name, Westwood Station; it is University Station.
