200 West St., Waltham
Medical and biotechnology companies played a key role in nursing Waltham’s office sector back to health after one of its worst stretches ever, but there are suddenly concerns about a relapse in that core suburban market due to recent difficulties in the life sciences industry. A decision by struggling Praecis Pharmaceuticals Inc. to sell its Winter Street headquarters could dump more than 100,000 square feet of space onto Waltham’s office inventory, while medical research firm Parexel International has already vacated one 65,000-square-foot building and may be angling to sublease an adjacent facility, according to industry sources.
“It’s a little disconcerting,” one observer remarked last week of the retrenchments. Parexel is shipping several employees from the vacated 195 West St. in Waltham to the CrossPoint Office Park in Lowell, sources claimed, and also is reportedly shuttling workers into space next door at 200 West St. Both Waltham buildings are owned by Boston Properties, and sources said Parexel has lease agreements in place until 2008 in the two buildings. Calls to both Parexel and to Boston Properties to discuss the movements were not returned by Banker & Tradesman’s press deadline.
Sources said Boston-based real estate services firm Richards Barry Joyce & Partners has been retained to sublease 195 West St. for Parexel, identifying RBJ principal Michael R. Frisoli as the lead agent. Frisoli was unavailable for comment on that rumor, or to discuss additional theories that Parexel is also hoping to get out from under the obligation at 200 West St., where it reportedly leases close to 150,000 square feet. “They are doing it quietly,” one source claimed of the latter initiative. “But [the space] is there for the taking.”
RBJ apparently also is involved in the Praecis Pharmaceuticals transaction, with the company said to have won the assignment to sell the headquarters building at 830 Winter St. The firm’s investment sales chief, Richard F. Herlihy, did not respond to a phone call regarding the situation, but sources said Praecis is likely to lease back a portion of the 175,000-square-foot facility, for which the asking price was not made available. Previously located in Cambridge, Praecis acquired 830 Winter St. from Bren Schreiber Properties for $41.5 million in 2000 and then converted the shell property into modern laboratory and office space.
“It’s a stunning building,” opined one source, estimating that Praecis is looking to stay in 30,000 to 40,000 square feet at 830 Winter St., providing any buyer with a measure of stability. As for the potential influence on the Waltham market over the near term, some industry professionals predicted the number of years left on the Parexel space could make it attractive to tenants, but suggested that fit-out allowances would be less generous than those available through direct leasing at nearby properties such as Bay Colony Corporate Center. The $30 per-square-foot rental mark being achieved in prime Waltham buildings could set up the Praceis and Parexel space as low-cost alternatives for firms that like the community, one broker noted.
‘The Bottom Line’
Despite the setbacks, Waltham and the broader Route 128/West office market are still much improved over the conditions that hit during the recession of 2001 and lingered for more than two years, bringing availability rates in that market to more than 30 percent. According to Spaulding & Slye Colliers, the Route 128/West submarket posted 585,000 square feet of positive absorption in the first six months of 2005, including 215,000 square feet in the second quarter.
The core submarket helped the suburban office market reach 1.56 million square feet of net absorption overall in the first half of 2005, bringing the suburban vacancy rate down to 24.3 percent. Route 128/West is faring even better with an availability rate of 19.6 percent and a vacancy rate of 15.6 percent. Of the 3.79 million square feet of supply of space available for lease in that submarket, 3.01 million square feet is being offered on a direct basis. In Waltham, the life-sciences space coming available will also have to compete with buildings being emptied out by other corporate retrenchments, such as 55,000 square feet at 201 Jones Road being subleased as a result of Computer Assoc. buying Netegrity.
Trammell Crow Co. principal John Boyle concurred that Waltham has seen a bit of backsliding recently, but the suburban leasing veteran said he is generally encouraged by conditions in the area. “There are some great things going on,” Boyle said, including several promising tenant space requirements hitting the street. Boyle declined to discuss any specific deals, but said he believes efforts to reduce lease commitments or sell properties such as being done by Praecis are largely indicative of the competitive business climate in vogue at present. “Those types of consolidations are just part of the world we live in now,” he said. “Companies have to be very focused on the bottom line Â… and real estate is a big part of that.”
Joe Clements may be reached at jclements@thewarrengroup.com.
