California-based Spear Street Capital LLC, which bought Concord’s 300 Baker Ave. last year with the knowledge that its biggest tenant was leaving, recently brought in Oxford Instruments and Earthtech via two lease deals totaling 72,000 square feet.
The departure of a building’s chief tenant is often a crisis, but in the case of Concord’s 300 Baker Ave., owner John Grassi saw the situation as an opportunity, according to the Spear Street Capital LLC principal whose California-based firm purchased the well-known suburban office building last year for $44 million. Befitting a value-added approach, “we bought it with the knowledge” that Avaya Inc. was about to abandon its longtime home in favor of Chelmsford, said Grassi, a departure that left an estimated 170,000-square-foot gap and reportedly stunted investor ardor for the asset.
One year after securing 300 Baker Ave. just in time for the Central Route 128 office market’s rapid resurgence, Spear Street Capital’s gamble appears to be paying off, evidenced by two leases totaling 72,000 square feet just inked at the 400,000-square-foot property. Earthtech is relocating from a nearby building into 52,000 square feet, and Oxford Instruments has agreed to take 20,000 square feet. Those deals accentuate a major renewal and expansion to 115,000 square feet a few months earlier by SolidWorks Inc., while several other deals are pending, said Grassi. Occupancy has risen from about 70 percent to 90 percent, he estimated, including a portion of empty space leased to the building’s former owner, MetLife.
Besides the increased pace of demand in the submarket, Grassi credited upgrades to 300 Baker Ave. for helping spark the interest, with more than $1 million already spent improving signage, landscaping, common areas and mechanical systems. “We like the program we have [implemented],” said Grassi, citing the leasing and management efforts of Trammell Crow Co. as a key element in the string of successes.
“They have done a great job,” said Grassi, while Trammell Crow Co. principal John J. Boyle III gave kudos to the landlord’s willingness to negotiate leases and the capital commitment. “The building shows well,” said Boyle, observing that Spear Street recognized that “if you lose a tenant, you’ve got to move quickly” to fill the vacancy. “They are very competent, and they know how to get things done,” said Boyle, who represented the building in the latest leases along with Trammell Crow Senior Associate David M. Boyle. Trammell Crow principal Brian Hines and Harry Johnson were agents for Earth Tech, a division of Tyco International. Bruce Grean of CBRE/New England was the broker for Oxford Instruments.
None of the participants spoken to would provide terms for the leases, but asking rents have been in the low $20 per-square-foot range, said John Boyle, an impressive rate given the region’s sharp downturn that sent rents plummeting well below that level for many suburban markets. In the wake of the submarket’s solid year, CRESA Partners puts the average asking rent there at $20-to-$23 per square foot for Class B space and $26-to-$35 per square foot for Class A space, with the high end reserved for prime properties in Waltham.
‘High-Tech Feeling’
While not in the Class A category, and a bit off the beaten track, 300 Baker Ave. is a beneficiary of the region’s flight-to-quality trend, said John Boyle, noting its history as a top-level property and the proximity to commuter rail and major highways. In some respects, it might be considered one of suburban Boston’s first high-tech buildings, serving from the 1950s and several decades hence as the headquarters of GenRad Inc. Badly in need of an upgrade, 300 Baker Ave. was converted to a multi-tenanted office complex in the mid-1990s by developers Ian Gillespie and Denison Hall, who then sold the property in 1999 for $47.7 million.
“The building has a very cool, high-tech feeling,” said Grassi, explaining that Spear Street is using the capital investment to retain 300 Baker Ave.’s reputation as a leading Concord address. “It has a completely different look when you walk in,” said Grassi, whose previous experience locally was in running the Bay Colony Corporate Center in Waltham for the Shorenstein Co. During his tenure, the San Francisco-based company added a fourth building and cemented Bay Colony’s reputation as a core Waltham property, underscored by its sale earlier this year for $272 million.
Having witnessed the gyrations in suburban Boston first-hand for the past decade, Grassi said Spear Street was confident that the area would see a rebirth. “It is improving,” he said. “We are seeing a lot more foot traffic.” Once reaching into the 30 percent range, the Central Route 128 West office market is now at 17.9 percent availability, according to third-quarter figures from Spaulding & Slye Colliers.
John Boyle concurred with the upbeat assessment, noting a series of high-profile leases recently completed in the area, including the Instrumentation Laboratory pact for 400,000 square feet in Lexington and more than 150,000 square feet of leasing done this summer at the Stony Brook Office Park in Waltham. In the latter case, John and David Boyle represented Rhytec Inc. in a 32,000-square-foot lease announced last week in the Stony Brook’s Building Two, with the firm relocating from Bay Colony.
According to John Boyle, Rhytec was seeking a measure of distribution space available at Stony Brook. Also signing on was DDJ Capital Management, which leased 16,000 square feet in Building Three. Neil Schneider of McCall & Almy was the broker for DDJ Capital Management, while Spaulding & Slye Senior Vice President Alex Dauria and Assistant Vice President Jay Nugent negotiated for Stony Brook’s owners, Saracen Properties and Rockpoint Group.
As for 300 Baker Ave., John Boyle said he anticipates that other leases will be signed in the coming weeks, adding to the property’s recent momentum. Also available is the MetLife space, which the firm agreed to lease to hasten the sale of the building to Spear Street Capital, according to Grassi, who said he expects the fallow quarters will draw interest. “It’s a tough market, and you’ve got to fight for deals and you’ve got to have nice space, but there are some optimistic signs that weren’t out there a year and a half ago,” said Grassi. “I think we will do well with it.”
