The new owners of 75 Sylvan St. in Danvers, which has stood vacant for three years, plan to spend $25 million to renovate the building into first-class office space.
It has been shuttered in darkness for three years, but the future is suddenly looking brighter for 75 Sylvan St. in Danvers.
A longtime plant for lighting manufacturer Osram Sylvania, the hulking building was acquired last week for $5.6 million by a joint venture partnership of developer Robert S. Burr and Gilbane Properties. The new owners are now pushing ahead full throttle on a repositioning of the structure into Class A office space, one slated for completion later this autumn.
“It’s a great-looking building,” said Burr, who predicted the property will appeal to a new wave of tenants who appreciate the brick-and-beam architecture, ample natural lighting and unique interiors which 75 Sylvan St. offers. Other potential lures include a generous parking ratio of four vehicles per thousand square feet rented, plus access to a bevy of stores, restaurants and hotels in the surrounding Danvers area. In addition, Burr said he believes the North Shore office market has come into its own in the past few years, with both new construction and rehabbed properties creating opportunities for companies to locate and expand there.
“I think people have figured out that [the North Shore] has everything they need right there,” said Burr, a veteran broker with nearly 20 years in the real estate leasing and investment business. He left Spaulding & Slye Colliers last year to pursue a development career, settling on 75 Sylvan St. as his first undertaking.
Among those also bullish on the project is Greg Klemmer, a principal with Klemmer Assoc. who has been marketing the building since the manufacturing operation was relocated out of the country. Klemmer said he has always believed in the property as an office destination, maintaining that the missing ingredient was a development group possessing the wherewithal to push ahead and make the necessary upgrades to realize that potential.
“The biggest problem in this market is not having the space ready in time,” said Klemmer, who added that 75 Sylvan St. previously faced competition against build-to-suit construction. With the backing of Burr and Gilbane, Klemmer said he believes the property will begin yielding activity in the short term.
“It should do well,” said Klemmer, who has brokered the sale of several Osram properties recently. Not only does the market have a scant 6 percent vacancy rate, Klemmer noted that there are precious few options available for tenants needing more than 40,000 square feet of contiguous space. The Sylvan Street property will provide 280,000 square feet to tenants. And despite Burr’s pledge that the property will be “first class all the way” following a $25 million capital infusion, he and Klemmer said they believe the rental rates will be low enough to offer companies a significantly lower pricing option.
Seeing Green
The developers are currently projecting rents in the mid-$20 per-square-foot range, a rate that would be far below the $50 and $60 per-square-foot mark being achieved in Cambridge, and even $10 to $20 per square foot below what can be found in such nearby suburban communities as Wakefield, Woburn and Burlington, all just a few minutes away.
“Looking at the bottom line, [tenants] will see this as a great opportunity,” Burr said, especially now that the anything-goes pricing of 2000 appears to have waned in the wake of fiscal difficulties among technology companies. Klemmer said he believes the Osram building will attract a mix of new and old-line companies, especially given its proximity to both Interstate 95 and Route 128.
In any event, Burr and Gilbane are acting quickly to capture the tight market conditions. Architectural services are being provided by Symmes Maini & McKee and PDA, while a subsidiary of Gilbane will handle construction services. Along with new mechanical systems and extensive landscaping, the renovated property will include a courtyard and a concentration on energy efficiency that will allow it to be considered a so-called “green building.”
Among those who also are bullish on the North Shore is Stephen J. Murphy, a principal with Insignia/ESG in Boston. Murphy, whose firm is active from Woburn through Danvers, said the market has benefitted from the lack of supply and rising rental rates seen in areas closer to Boston. The Tower at Northwoods, a 185,000-square-foot building for which Insignia/ESG is leasing agent, has just 5,000 square feet of space available at present, while Cummings Properties is moving ahead with an expansion at its Cummings Center mixed-use complex in Beverly.
Even with a sudden cooling of the overall office market in recent months, Murphy said he believes that the North Shore will continue to attract companies in 2001, predicting that the area will see “reasonable growth” in the coming months.
“It won’t be quite as hectic as last year, but there’s still plenty of activity there,” said Murphy.
“The fundamentals are still strong,” agreed Burr, who credits the 1.2 million-square-foot repositioning of a former shoe plant into the Cummings Center as a key catalyst in the North Shore’s acceptance as a business address. A solid labor pool is another draw, he said, especially in such a competitive employment market.
