A division of defense giant Northrop Grumman has leased 85,000 square feet in Andover’s Brickstone Square office park.
It has been another difficult year in suburban Boston’s northern office market, but with the three-quarter pole fast approaching, activity does finally appear to be improving in communities near the confluence of Interstates 93 and 495.
Complementing the $58 million investment sale of a North Andover business campus to an Indiana firm, abutting Andover has scored another success with a sizeable lease consummated in the town’s Brickstone Square office park. A division of defense giant Northrop Grumman has inked an 85,000-square-foot commitment in a building previously occupied by venture capital firm CMGI. The group will be relocating from 55 Walkers Brook Drive in Reading early next year, acknowledged CBRE/Whittier Partners Vice President Hunter Emerson.
“We’re very happy that they have chosen Brickstone Square,” said Emerson, whobrokered the deal along with CBRE/Whittier principal George Nugent. Brooks Murphy of the Staubach Co. represented Northrop Grumman in the negotiations, but declined to comment on the situation when contacted last week, citing client confidentiality agreements. Besides the quality of the space Northrop Grumman will occupy, Emerson said he believes the firm was attracted by Brickstone Square’s extensive range of tenant amenities, large floor plates that will allow most employees to be on one level, and a location expected to accommodate existing staff. Totaling just over 1 million square feet in three buildings, the park is owned by Lehman Bros. of New York, while Emerson and Nugent are Brickstone Square’s exclusive leasing agents.
Turning the Corner
The Brickstone Square pact is welcome news for a market slammed by the technology crash that took hold following an unprecedented period of growth in the late 1990s for such communities as Andover, North Andover, Lawrence and Methuen. According to data compiled by Lincoln Property Co., the market had a direct vacancy rate of 5.8 percent at the end of 2000, whereas today that figure has jumped to 25.7 percent. The average asking rate for office space has fallen during that period from $22.42 per square foot to the current rate of $17.35 per square foot.
The north market actually enjoyed positive absorption last year after three years of negative absorption, but the troubles have reappeared this year, with Lincoln Director of Research Emily Schwartz placing the net absorption thus far at more than 245,000 square feet in the red. Coupled with sublet opportunities, the amount of available space in the area now exceeds 35 percent.
Emerson concurred that there has been a dearth of demand in the northern sector, although there have been a few leases of note, including the 58,000-square-foot expansion and renewal by Houghton Mifflin Co. at 181 and 187 Ballardvale St. in Wilmington, owned by BPG Ltd., and the leasing of nearly 35,000 square feet in Wilmington at 12-16 Jonspin Road to Azores Corp. Emerson said he is encouraged by the recent victories for the area, but agreed that velocity has been slower than many landlords would prefer.
“I think the market has turned the corner, but we’re a long way from the 1990s,” said Emerson. On the plus side, investors are indicating confidence in the northern reaches of suburban Boston, underscored by the acquisition of the North Andover Mills West campus by HDG Mansur. The sale, reported last week on Banker & Tradesman’s Web site, bankerandtradesman.com, involved 382,000 square feet of space occupied by Schneider Automation.
Coupled with a lease that extends to 2013, the prospects of better times ahead encouraged at least 10 bidders to pursue the North Andover asset, said Trammell Crow Co. principal James F. McCaffrey, who brokered the transaction along with investment group team members Peter Joseph, Christopher Phaneuf and Jordan Berns. “It was an important deal to get done,” said McCaffrey, whose firm represented the seller, Yale Properties USA, and procured HDG Mansur.
Efforts to contact HDG Mansur officials were unsuccessful by Banker & Tradesman’s press deadline, but McCaffrey said he believes the private investment advisory firm had been seeking opportunities in suburban Boston since gaining a stake in the Bay State last summer. “I think they had their eye on a lot of assets in the area,” said McCaffrey. The stability of the North Andover Mills West asset was apparently one selling point, as was the diversity of the tenant mix making its way into the region during the past few years. Along with Northrop Grumman, for example, defense company Raytheon Inc. is said to be considering the I-93 market, while life sciences company Wyeth Pharmaceuticals is reportedly looking to expand in the Wilmington area.
Yale Properties owns the adjoining North Andover Mills East campus, which has about 230,000 square feet leased to a range of companies. After initially offering both the west and east properties for sale beginning last autumn, Yale has changed course and opted to retain the latter campus. A division of a Canadian company, Yale Properties USA also has a partial interest in the Cross Point office complex in Lowell and owns 230 Congress St. in Boston, a 12-story office/telecom building that it has recently placed up for sale, as well. Trammell Crow is also handling that assignment, one that McCaffrey said is proceeding apace.
