Hall Gillespie LLC successfully acquired 55 Fairbanks Blvd. in Marlborough last summer at a bargain price of $27.5 million.
It may not be anywhere near as good as the good old days, but conditions along Interstate 495 are showing a bit of improvement for office landlords as the first quarter of 2003 draws to a close.
“I think the activity has been encouraging,” Hughes Properties Corp. President Scott R. Hughes reported last week. “We’re seeing some movement in the office leasing, which is definitely a good sign.”
Among other developments, Bose Corp. is said to be inching ever closer to completing a major lease at a former Compaq Computer facility in Stow. That deal, first reported by Banker & Tradesman two months ago, is estimated at between 250,000 and 300,000 square feet, making it one of the largest direct leases in months. “They locked onto that property early on and they haven’t let go,” said one industry observer who has been following the Bose negotiations. Calls to the property’s broker, Cushman & Wakefield principal Kevin Hanna, and to Bose’s agent, Lenny Owens of McCall & Almy, were not returned by Banker & Tradesman’s press deadline. Despite that, the source following the talks claimed an agreement “is imminent.”
One landlord who would like to see more velocity for the I-495 MetroWest market is Ian Gillespie of Hall Gillespie LLC, whose group successfully acquired 55 Fairbanks Blvd. in Marlborough last summer at a bargain price of $27.5 million, or about $55 per square foot for the three-building, 500,000-square-foot complex. “The market feels like it’s a sideways market at the moment,” Gillespie said. “It’s still trying to feel its way to the bottom.”
Even with the market’s struggles, Gillespie said he is satisfied with the level of tenant traffic at 55 Fairbanks Blvd., estimating that his park sees about one major tenant per week, and noting that it has been able to garner attention from most large prospects circulating the area. While the high-tech sector continues to experience problems, Gillespie explained that a combination of patient capital and his team’s purchase of the asset at a low basis means the park can wait until it strikes a reasonable transaction. “I still feel fairly relaxed about Marlborough,” he said. “We are [positioned] to go out three to four years if we have to, although we feel good about where we are [competitively].” Given the low acquisition price, Gillespie said he believes the complex can compete favorably on pricing, adding that the ownership is also renovating the buildings and making infrastructure improvements such as a new access road.
‘Quality Sells’
The Hall Gillespie property has been dealing with at least one formidable competitor in The Campus at Marlborough, which until late last year had been the East Coast headquarters of 3Com Corp. After spending an estimated $100 million on the complex, 3Com ran into fiscal difficulties and sold it in December to Berwind Property Group of Philadelphia. Berwind, which paid $57.8 million for the massive office park, has retained Kevin Malloy of Lincoln Property Co. to market the space as a multi-tenanted facility.
Malloy said he is enthused by the amount of interest in the Berwind park, but said it is a simple equation. “Quality always sells,” he said, and 3Com certainly spared no expense in developing an employee-friendly environment, as well as one featuring state-of-the-art technology. Along with a lease to Exact Sciences and a leaseback of some space to 3Com, the facility reportedly garnered a serious look by the TJX Cos. as that Framingham-based retailing firm seeks at least 300,000 square feet in the MetroWest market.
The latest rumor circulating around the Berwind park is that Wellington Funds is preparing to lease an estimated 75,000 square feet there, with one source claiming the park’s high-end technology is a leading reason for the interest by that financial services concern. As with other potential prospects, Malloy declined to discuss whether Wellington is homing in on the complex. “There are some good things happening, but I can’t talk about it right now,” was all Malloy would offer. Nonetheless, several sources insisted that Wellington is on the cusp of committing to the property. Efforts to contact Wellington officials by press deadline were unsuccessful.
As for TJX, it is unclear whether the company has settled on any specific sites, with broker Christopher Tosti of CB Richard Ellis/Whittier Partners unavailable last week to discuss the status of the space search. Some sources said TJX has considered a range of possibilities, all the way from subleasing space up to a built-to-suit option. “I’m not sure TJX even knows what its going to to do yet,” maintained one source.
Even with such hesitation, and with deals taking increasingly longer to complete, Hughes said he believes the worst may be behind the MetroWest market. Not only are companies reaching the point where they have to make a decision on leasing space, Hughes said he believes landlords are also more willing to bargain. Whereas they might have previously been earning money from companies even if space was not being utilized, many of those agreements are reaching their end, Hughes explained, making the revenue stream less certain for many office buildings. That has forced landlords to become competitive. “The pricing has really adjusted itself to the market,” Hughes said. “That’s really big news.”
Joe Clements may be reached at jclements@thewarrengroup.com.
