One commercial real estate industry expert says the marketing of 19 Crosby Drive in Bedford is benefiting from the expansion of Route 3.
Although some claim the thin economy is as responsible as a wider roadway, upgrades to Route 3 between Route 128 in Burlington and the New Hampshire line are winning accolades from the commercial real estate sector, with many observers maintaining the $385 million project has eased congestion along the business-heavy corridor even as finishing touches continue to be applied.
“Accessibility and traffic flow are much improved from what it used to be,” CRESA Partners principal Joseph F. Sciolla said last week. “It has had a significant positive impact.”
CB Richard Ellis/Whittier Partners principal Gary J. Lemire concurred, maintaining that the expansion from two to three lanes on each side of Route 3 is making the 22-mile stretch easier to deal with for both tenants and real estate investors. The marketing of one Bedford asset on behalf of a client is already benefiting, said Lemire, who declined to discuss the negotiations for 19 Crosby Drive in detail.
Any assistance would be greatly appreciated by the region, with communities such as Billerica, Chelmsford and Lowell among the hardest-hit from the technology upheaval that battered Massachusetts beginning in mid-2001.
“There’s really nowhere to go but up,” said Sciolla, while Meredith & Grew Oncor Senior Vice President David J. Pergola said the vacancy rate for the Interstate 495/North submarket that encompasses the upper fringes of Route 3 skyrocketed from about 5 percent in the late 1990s to nearly 27 percent today. Properties previously achieving rents at $20 per square foot on a triple-net basis are now leasing at between $8 per square foot and $10 per square foot, said Pergola, estimating there is close to 1 million square feet of commercial space up for grabs throughout the corridor.
‘Explosive’ Industries
On the lower end of the roadway, Burlington and Bedford also have had their struggles, but NAI Hunneman Commercial Corp. Senior Vice President Thomas M. Aitken said he believes the widening program and investment in adjacent thoroughfares such as Route 62 and the Middlesex Turnpike will lead to further gains. Crosby Drive, which features a number of commercial buildings, is expected to be particularly aided by the improvements.
Partly due to the reduced need for office space, but also because of the infrastructure changes, Aitken said development sites along Route 3 are now being entertained for alternative construction, such as apartments or retail. “Developers are suddenly open to all kinds of different uses,” said Aitken. Existing office properties should welcome increased amenities for tenants, plus new residential options, said Aitken, while the decreased supply of office space would help keep rents reasonable. Aitken said he believes “the barriers are truly down” for tenants who previously would have balked at straying out of the Waltham market to Bedford or beyond.
Despite the recent leasing difficulties, Aitken and others familiar with Route 3 predicted better times ahead, although Pergola said it will require more diversity in the tenant base, from a focus in the past on technology to greater reliance on medical devices, life sciences and defense. There is no plethora of large requirements in the region, said Pergola, but he joined others voicing optimism that a new economic engine might emerge along Route 3 over the near term. “At the end of the day, those are explosive growth industries,” he noted, adding that “it could take off really quickly,” mimicking past recoveries.
Sciolla partly blamed the summer doldrums for the torpid leasing activity and said he also believes Route 3 will ultimately see demand rebound. Better buildings continue to attract tenants, said Aitken, citing New England Executive Park and 25 Mall Road, both in Burlington, while two sizeable leases also were recently signed in Bedford, including one involving Sciolla and his team at CRESA Partners. The Nordblom Co. has fared well with its Northwest Park on the Middlesex Turnpike, said Aitken, who previously negotiated a 100,000-square-foot lease in that complex for tenant iRobot Inc.
Given an availability rate of about 30 percent in the 495/North submarket and lingering difficulties along the outer edges of Route 128, Pergola acknowledged that Route 3 remains a tenant’s market. There have nonetheless been some sizeable leases completed this year, including Avaya Inc. taking 80,000 square feet in Chelmsford, with the firm relocating from Concord.
Having assisted in the recent sale of 25 Mall Road in Burlington for $55 million, Pergola said he is eyeing the sizzling investment sales market, but is also representing prime assets in the north markets in two subleasing opportunities, those being 880 Technology Park Drive in Billerica and 7 Technology Drive in Westford. The former is a 150,000-square-foot facility leased to Nortel Networks, while Pergola is helping Teradyne in trying to find takers for the 3-story, 130,000-square-foot Westford building. The lease requirement, which runs for several years, came via Teradyne’s acquisition of a company, Pergola explained.
“They both have the quality” that finicky tenants are seeking, Pergola said of the Nortel and Teradyne properties, expressing confidence they will eventually lease even in the challenging economic climate. While there are plenty of options, Pergola said fundamentals are getting better as the year progresses. “We’re staring to chip away at the vacancy,” he said. The overall suburban office market enjoyed more than 1.5 million square feet of net absorption during the first two quarters of 2005, according to Spaulding & Slye Colliers, although Route 495/North actually posted negative absorption at the midyear point.
