Applied Micro Devices is subleasing the second floor at 90 Central St. in Boxboro, a deal totaling nearly 65,000 square feet of space.
Helping another piece of excess office space disappear from the suburban Boston landscape, Applied Micro Devices is subleasing the second floor at 90 Central St. in Boxboro, with the firm taking nearly 65,000 square feet from Agilent Technologies.
“It’s good news for the market,” said Richards Barry Joyce & Partners principal John C. Wilson, who represented Agilent in the negotiations along with RBJ&P associate Jamey Lipscomb. The Boston-based real estate services company has been retained to sublease the entire 175,000-square-foot building on behalf of Agilent, which occupied the property shortly before consolidating into another nearby facility.
The AMD agreement offers a modicum of momentum for the Interstate 495 North office market, which was hit hard by the bursting technology bubble that began in early 2001. Firms such as Lucent, Tellabs, Cisco and Agilent all put extensive amounts of space up for grabs simultaneously, leading to a spike in availability rates and a sharp drop in rents.
According to Spaulding & Slye Colliers, the availability rate for the North market was 34.2 percent at the end of the first quarter. That represents a slight decrease in availability from the start of the year, but is still dramatically higher than the 10.9 percent recorded by Spaulding & Slye five years earlier.
Wilson concurred that I-495 North has seen as difficult a stretch as any submarket, but he also said there are indications the worst may be behind the area. “Six months ago, I wasn’t that optimistic, but demand has really picked up since then,” he said. “Things are finally starting to happen.”
‘A Huge Lottery’
The I-495/Massachusetts Turnpike submarket enjoyed 436,000 square feet of net absorption in the first quarter, Spaulding & Slye estimates, while brokers such as David J. Pergola of Meredith & Grew say they are generally encouraged by the level of tenant showings being conducted.
“Velocity wise, we’re very busy,” said the M&G vice president. “We’ve seen a noticeable uptick in activity.”
In one of the larger deals of the year, Pergola and his father, M&G Executive Vice President David L. Pergola, represented Empirix in a 60,000-square-foot sublease at 20 Crosby Drive in Bedford, with an expansion option for the entire 74,000-square-foot building. The sublessor, RSA Security Systems, was represented by T3 Realty Advisors of Waltham.
The Empirix deal, first reported last month by Banker & Tradesman, is one of several sublease pacts struck of late, offering the prospect that landlords may no longer have to compete against such a low-cost alternative. Codman Co. principal David Campbell noted that the amount of term left on space being offered for sublease continues to dwindle, although he stressed that the overhang of supply remains formidable. “Anybody that lands a 60,000-square-foot deal right now is winning a huge lottery, because there are a ton of opportunities available for a tenant of that size,” said Campbell, describing the AMD sublease as a classic example of the so-called “flight-to-quality” trend prevalent at present.
“That’s good product,” Campbell said of 90 Central St., a building owned by Wells Real Estate Funds, which purchased the property in 2002 from Koll Bren Schreiber. Neil Ross and Greg Zais of the Staubach Co. negotiated the deal for AMD.
David J. Pergola acknowledged that the suburban office market remains soft, but added that the cream of the crop offerings are finally beginning to see commitments. That is particularly true for “plug-and-play” subleases, in which the tenant is essentially given a turnkey facility replete with furniture, cubicles and even in-place technology. One such property in Billerica leased to Nortel Networks was recently taken over by a company servicing the gift industry, while an adjacent property has reportedly now been leased to GE Panametrics. Owned by Archon Atlantic, that building will undergo an expansion to further accommodate Waltham-based GE Panametrics.
“Most of the really solid plug-and-play deals have been eaten up, and the challenge now is to educate companies that they will not be able to choose from six of those opportunities anymore,” said David J. Pergola. The Nortel Billerica properties being taken off the list will further erode that inventory. Fortunately for the leasing public, Meredith & Grew does have a substantial plug-and-play offering on the market as it attempts to sublease 7 and 9 Technology Drive in Westford on behalf of Teradyne Inc. The properties are located in the Westford Technology Park, sited just off I-495.
Totaling 230,000 square feet, the buildings are being offered either separately or together, said David J. Pergola, who is handling the assignment with Meredith & Grew Assistant Vice President Matthew S. Adams. “They are outstanding buildings,” said David J. Pergola, a view apparently shared by other industry professionals. “They will get attention,” Campbell predicted of the Teradyne properties. An adjacent building at 10 Technology Drive has just scored a coup, with Red Hat Software subleasing more than 40,000 square feet previously occupied by Juniper Networks.
