Top-shelf retailers like Gap, Williams-Sonoma and Tiffany & Co. realized they couldn’t get a heartbeat out of the Atrium Mall in Chestnut Hill, so they closed their stores, forcing the mall’s eventual sale. Now the shopping center’s new owner will try to bring the ailing mall back to life with tenants that might have the tools to resuscitate it – doctors.
The Bulfinch Cos. recently purchased the 300,000-square-foot Atrium Mall for $46 million from Simon Property Group. Bulfinch is attempting to reposition the property into a suburban medical office hub, marketing its proximity – about 4.5 miles – to the Longwood Medical Area (LMA) in Boston.
Bulfinch officials said they don’t think major LMA-based groups are going to relocate their research and development operations out of the medical hub. But they do think those institutions will want cheaper, more ample back-office space outside the tight LMA office market, leaving them with more room for the kind of work essential to their firms, namely research.
In fact, there is demand for that kind of space from Route 128 and west, in addition to the LMA and east.
“As we see a tremendous amount of merger and acquisition activity in healthcare systems, I think you’ll see demand for space from physician groups as they break off and become affiliated with different groups,” said Philip DeSimone, managing director in the healthcare practice group for Jones Lang LaSalle in Boston. “There will be a need from groups getting out of space and breaking away from groups, as well as consolidating groups together. Medical office is where you’ll see the demand from. And as hospitals start to de-campus uses that don’t need to be in hospital settings, like back-office space, that will go towards Brookline and west.”
And while the Atrium Mall’s tenants dropped like flies, there is one remaining healthcare pseudo-tenant there now. Partners Healthcare leases parking spaces in the mall’s garage, and a shuttle bus runs to a Brigham and Women’s ambulatory center at 850 Boylston St. in Boston and into the LMA.
“A lot of the hospitals are looking to reduce costs and increase efficiency by branching into suburban facilities,” Bulfinch CEO Eric Schlager told Banker & Tradesman.
Location, Location
But back-office hospital uses and physician’s groups aren’t the only tenants Bulfinch is gunning for, Schlager said. The firm is going to try bucking the trend at the Atrium and bring in some retail tenants, preferable selling beauty and nutrition products or other wellness-oriented wares.
Bulfinch is not stopping its marketing with medical space, either. Richards Barry Joyce & Partners (RBJ), the firm marketing the Atrium, is also gunning for traditional office tenants. To look at the place, it’s hard to imagine office users wanting to be located in a windowless monolith, said one industry broker that asked for anonymity. Bulfinch said it is planning to change that by installing windows across the board.
RBJ has already been in front of some tenants in the market that are looking for upwards of 100,000 square feet, said Chris McCauley, RBJ senior vice president. While he would not specify what tenants, major tenants in the market include online retailer Wayfair, which could need up to 120,000 square feet of space in 2014; athenahealth, which is expanding its medical record-keeping and cloud computing services, is in the market for 250,000 to 300,000 square feet; and TripAdvisor, the Expedia spinoff, is searching for 200,000 to 300,000 square feet to grow into, according to industry sources.
McCauley said the property has an advantage because there are few assets that can offer 300,000 square feet of space. But according to one industry insider, there’s just one catch, and it’ not a trivial one in real estate circles – location.
While Bulfinch is touting the high visibility of the asset, traffic and bottlenecks along Route 9 are notoriously bad, and “there’s just no good way to get there,” the source told Banker & Tradesman. “I think they’re going to have a lot of difficulty getting tenants to sign on. If I’m a business owner, I have to think about getting my employees there. It’s hard to get there by train. It’s not easy to get there by car. It’s going to be a real challenge for them.”
Redevelopment of Atrium Center is slated to begin this year, Schlager said. ADD Inc. is the architect and John Moriarty & Assoc. will be the project’s general contractor. Schlager said the project will be complete by the end of next year.
