Another question mark in Greater Boston’s commercial real estate investment sector has apparently been answered, with a Pennsylvania company reportedly having agreed to acquire the 3Com Corp. office campus in Marlborough, according to industry sources.
Berwind Property Group is said to be buying the 542,000-square-foot complex for an estimated $115 per square foot. If that number bears out, the 128-acre development would fetch just over $62 million. Sources also claimed that Berwind Property Group will move a firm owned by its parent company to the 3Com property. Sources identified that company as Zymark Corp. of Hopkinton.
“It is my understanding that Berwind has taken [the 3Com property] off the market and they do have a tenant they are bringing in,” said one source, estimating that Zymark will take as much as 150,000 square feet of space at the Marlborough complex. 3Com reportedly will also continue to lease a portion of the four-building campus, with one source estimating that as much as 350,000 square feet will be occupied at 3Com once the Berwind strategy is executed.
Calls to Berwind Property Chief Operating Officer Arthur P. Pasquarella and Zymark President Kevin Hrusovsky were not returned by Banker & Tradesman’s press deadline, while officials at Cushman & Wakefield also did not respond to inquiries. Cushman & Wakefield is brokering the sale of the parcel. In any event, several sources said they have heard of the Berwind/Zymark arrangement, with one investment specialist maintaining that Berwind made a pre-emptive strike at buying the complex before Cushman & Wakefield had even launched its marketing program.
If the agreement is reached, it would be one of the first positive things to occur for the property since the high-tech economy burst in mid-2000, after which firms such as 3Com, Lucent and Cisco Systems suddenly found themselves awash with unneeded real estate. 3Com acquired the parcel in 1997 from Metropolitan Life and set about developing what was ultimately to be 1.2 million square feet of office space.
The Santa Clara, Calif.-based company had gotten about half the space developed in four buildings when the high-tech industry’s problems began emerging. 3Com had developed the Marlborough property under a so-called synthetic lease arrangement, but the questionable nature of such financial arrangements led the firm to recently restructure that lease to a more standard format. Another blow occurred earlier this year when a small tenant leasing space at the campus, Cereva Networks, went out of business, leaving an additional hole to plug at the park.
Marlborough Market
When it initially began marketing the property for sale, 3Com was said to be seeking a return of $130 per square foot, a figure most industry observers felt would be difficult to attain given the suburban Boston office market’s lingering problems. According to Spaulding & Slye Colliers, the availability rate for office space in the suburbs stood at an alarming 25.5 percent at the midyear mark, and that market is expected to end the year with overall negative absorption, partly due to a continued flood of sublease opportunities becoming available.
There have been some encouraging building sales in Marlborough this year, including the purchase of Lake Williams Corporate Center by Great Point Investors and 55 Fairbanks Blvd., acquired by local players Ian Gillespie and Denison Hall for $27.5 million, or about $55 per square foot. Lake Williams had a healthier per-square-foot price of $156, but observers attributed that to a solid tenant roster, including Fidelity Investments.
Zymark is a leader in the field of laboratory automation and robotics, and is positioned to benefit from the emerging life sciences industry, on which Greater Boston is pinning hopes for a recovery in the coming years. The Berwind Group, of which Berwind Property Group is a subsidiary, is a global, privately owned company that owns a diverse array of manufacturing and service companies. According to company financial information, Berwind Group has nearly $1 billion in revenues, real estate investments in excess of $1 billion and funds under management of about $250 million.
Locally, Berwind Property Group owns such assets as 100 CambridgePark Drive in Cambridge, 8 Federal St. in Billerica and Avnet Park in Peabody, which the Berwind Property Group acquired last year for $18.2 million. In a scenario similar to what may occur at 3Com, Berwind announced when it acquired Avnet Park that it would move Dynisco, another one of its companies, into the property after a renovation of the 325,000-square-foot development.
If the Berwind deal is cemented, it would be the latest sign that investors have long-term confidence in the suburban office market, although the year promises to be among the weakest in investment sales since the recession of the early 1990s. In another recent example, reported in last week’s Banker & Tradesman, a New Jersey investor has reportedly committed to buy the CrossPoint office complex in Lowell. That deal is also being handled by Cushman & Wakefield, and is said to be trading at an impressive $156 million, or about $130 per square foot.
The prospective buyers of CrossPoint, Advance Realty Group, have not returned phone calls regarding that sale, while Cushman & Wakefield officials have declined to discuss the transaction.