What happens when a real estate developer forces work on a project to stop in its tracks?

That’s the question being asked after the company behind a high-profile office and retail project in Waltham recently restarted construction off Route 128, after nearly a month when the hammers had ceased to swing at the site.   

In a family feud widely reported by the media, litigation involving shareholders of Market Basket, the largest tenant anchoring the 1265 Main St. development, brought construction on the 120-acre site in Waltham to a screeching halt on Sept. 6.

Thanks to a power struggle between cousin shareholder Arthur S. DeMoulas and company CEO Arthur T. DeMoulas, invoices from Retail Management and Development and 1265 Main LLC, the project’s developers, were going unpaid. So they notified the general contractor, Commodore Builders, to stop work and batten down the hatches. Commodore, meanwhile, was paid in full for their work.     

More than three weeks passed with no activity at the job site, costing the developers “hundreds of thousands of dollars,” and about 100 people were told to stay home from the job, said Scott Lang, an attorney representing 1265 Main and RMD.

Then, on Sept. 30, the developers decided to restart the project, working on all aspects of the retail portion of the project except for the Market Basket. But the work stoppage threw off the construction timeline by about a month, so now subcontractors are scrambling to finish the exterior work and get the project buttoned-up for the winter months.

Alternative Plans

With DeMoulas Super Markets Inc. (DSM), the corporate parent of Market Basket, and its power structure under fire, it is unclear when work will restart on the supermarket portion of the project. It’s now also unclear if the Market Basket store will be built at all.   

Lang said he and his clients are awaiting a decision from the DSM board of directors on whether the company still intends on opening at the Waltham site. If the board decides it does not want to move forward on this site, “I’m sure there will be a tremendous amount of interest in it” from other grocers, Lang opined.

There Will Be Retail

“It’s a possibility that every competitor of Market Basket has already thought about it and begun to approach 1265 Main,” Lang told Banker & Tradesman. “There’s no question there will be a retail establishment in there.”

But that’s exactly what is in question here, despite the fact the Waltham site may be a prime location for a grocer. While several people with direct knowledge of the project said they were confident the Market Basket would be built, there’s now no guarantee it will happen.

In the long-term, the Demoulas fiasco and work stopping on the project will not affect tenant confidence, according to Joe Albanese, CEO of Commodore Builders. However, in the short-term, “I think anything like this introduces uncertainty and questions, and I think those questions could cause potential tenants or real estate people to ask questions.”

And what happens if Market Basket opts out of the site? One of the biggest bonuses for Waltham was going to be the food-centric destination the supermarket would create with a food court, where workers from the 120,000-square-foot office building planned for the site would be able to walk to and grab lunch.

“There’s really nowhere else in Waltham that has that kind of amenity,” said Duncan Gratton, senior managing director with Cassidy Turley in Boston, the firm marketing the office portion of the project. “I think that’s what people really want.”

It’s the kind of amenity that has been so highly sought-after by companies deciding to locate their offices in nearby Burlington, where mixed-use projects abound. That has helped tip the scales for Burlington, long known as the town where the mall is located.  

That’s one reason the Polaroid project has been so important for Waltham officials – they need this kind of mixed-use project to help make the city more competitive and attractive to large office users. And those retail amenities will be huge in helping to secure tenants to fill the 120,000-square-foot office building that is part of this first phase of the project, which totals about 280,000 square feet of commercial space.   

There’s  talk that the building planned for offices could be repositioned with alternative uses, but no changes have been set in stone. So, for now, Cassidy Turley is marketing the two-story space as offices. The majority of tenant interest right now is coming, not surprisingly, from technology-based firms. Beyond its proximity to Route 128, tenants are likely intrigued by the rental rates at the property, which will be priced in the upper $30s a square-foot, according to Gratton. Compared with the mid- to upper-$40s a square-foot that users have to pay for new construction in the area, the renovation job offers more affordable prices.

Email: jcronin@thewarrengroup.com