The Blue View Corporate Center in Canton has yet to ink a single tenant despite the fact that it’s been months since it was built.
If there were such an event, the BlueView Corporate Center in Canton might appear a good candidate for commercial real estate’s “Be Careful What You Wish For” contest.
Located at the junction of Interstates 93 and 95/128, the home of the BlueView Nursery had long been eyed as a prime office destination, and the vision was fulfilled when National Development bought the 10-acre site and erected a 183,000-square-foot office building overlooking Route 128. Unfortunately, the prolonged economic boom which ushered in the new millennium eroded overnight beginning in early 2001, creating havoc in Boston’s office market to the point that BlueView has yet to ink a single tenant months after completion.
“It has been slow,” acknowledged suburban broker Michael Frisoli, who nonetheless predicted that Newton-based National will fare well with the building given the location and a veteran ownership team. Armed with patient money from Fidelity Investments, BlueView has the staying power to ride out the downturn, Frisoli maintained.
“I think they will eventually do well with it,” he said. “They are just going to be patient until they can find the right deal.”
That is precisely the approach National is taking, said Trammell Crow Co. broker Sean Teague, who is marketing the space for the landlord. Teague concurred that BlueView has suffered from a lack of demand since opening, mimicking the rest of the office market, but said there is no sense of panic or of being forced into negotiating a deal at an unprofitable rate. Teague said he is also encouraged by a recent surge of companies shopping for office space in the Route 128 South market.
“The good news is that there has been activity,” said Teague. “It’s not anywhere near as barren and distraught as some people would have you believe.”
For example, while he would not identify the prospect, Teague said BlueView is in active negotiations with one company seeking 80,000 square feet, and said there has been a steady level of interest among tenants needing 5,000 to 10,000 square feet. Also reporting “an uptick” of showings was Cushman & Wakefield Senior Director J.P. Plunkett, who is marketing a speculative office building adjacent to BlueView.
“The stream [of potential tenants] has definitely increased over the past 60 days,” Plunkett said. “Every day, things look better and better.”
‘Very Steady’
Cushman & Wakefield is representing 130 Royall St. in Canton, a 175,000-square-foot office building that also opened up last year sans tenant. The three-story building is a joint venture between the Lone Star Funds of Texas and local player Conroy Development. Not surprisingly, 130 Royall St. is chasing the same 80,000-square-foot requirement that BlueView is wooing, confirmed Plunkett, who also declined to identify the firm beyond saying it is a Fortune 500 operation.
While praising BlueView as a formidable competitor, and predicting National’s building will secure tenants, Plunkett said he is optimistic of winning the battle to sign the unnamed tenant at 130 Royall St. Among other attributes, the building can do a lease in the mid-$20 per-square-foot range, said Plunkett, whereas he estimated BlueView is marketing space in the high-$20s to low-$30s per square foot.
Teague confirmed that BlueView is in the upper-$20/low-$30 range, but added that the credit level of a tenant could bring the pricing downward. In either case, both brokers said they believe having the 80,000-square-foot tenant sign at one or the other building will aid their lease-up cause in the long run.
Two leading suburban users which apparently did not even consider the Canton options were Bose Corp. and the TJX Cos., each of which is seeking upward of 300,000 square feet after outgrowing their operations in Framingham. The two companies expanded their search to the Route 495 region around Marlborough due to a lack of large blocks of contiguous space in the Framingham/Natick market, reportedly with little or no consideration for Route 128 South.
Plunkett said he is not surprised that TJX and Bose looked elsewhere, explaining that most of the growth in the Route 128 South market has come from either Boston or within the submarket itself. Rarely will a firm stray from Framingham, Needham or even Waltham to Route 128 South, he said, typically only doing so if the company is in search of less expensive rents.
“It’s strange, but that’s always been the case,” said Plunkett, who has covered the Route 128 South region for nearly a decade. “The [Massachusetts Turnpike] market just doesn’t peek down here very often.”
Canton continues to evolve as a viable corporate address, according to Teague, making considerable progress in recent years. The arrival of Reebok from Stoughton to Canton in the late 1990s has been a big plus for the market, Teague said, noting several other top firms which also have arrived, including Meditech and Instrum.
“With each business cycle, it gets a little more developed,” said Teague, opining that Bose and TJX made their decisions based on retaining current employees, many of whom live in the MetroWest suburbs. TJX had reportedly come close to signing at 3Com’s former campus in Marlborough, while Bose is said to be negotiating on a former Compaq facility in Stow.
Despite the dual MetroWest snub, Route 128 South has benefited from a cadre of major corporations emanating from downtown Boston, with such firms as State Street Bank and the former Boston Edison both establishing operations in the submarket during the past decade. While Quincy and Braintree have been leading destinations, Teague said communities such as Canton are finally beginning to lure such firms, adding that he believes BlueView is a leading contender for both back-office users and a headquarters operation. Efficient floor plates exceeding 60,000 square feet can accommodate the back-office use, he said, but Teague also noted that strong sight lines along Route 128 can bolster a corporate identity.
“The visibility is one of BlueView’s most important [characteristics],” said Teague.
Beyond a competitive rental rate, Plunkett said 130 Royall St. is seeing prospects because of a layout that has a “loss factor” in the single digits. In other words, the amount of common space such as lobbies and corridors is significantly less than in other buildings, Plunkett said, citing some properties whose unusable space is closer to 20 percent. A 100,000-square-foot user at 130 Royall St. would be able to employ about 94 percent of the space, Plunkett said.
“It’s very efficient,” he said of the structure. “You can lease a lot less space in our building and still be as comfortable.”
Plunkett also praised the design, but stressed that it is not overly opulent. In the wake of Enron and other corporate scandals, Plunkett said firms are wary of appearing too ostentatious. “It’s not an ego-trip building at all,” he said of 130 Royall St.
In some respects, the low-key approach at 130 Royall St. is reflective of Route 128 South as a whole, said Teague. Whereas other markets such as Cambridge and Waltham have seen dramatic swings in leasing activity and pricing, with Waltham fetching rents near $70 per square foot in the latest boom before backtracking to about half of that amount at present, Route 128 South has been a model of consistency, according to Plunkett.
“It doesn’t get the headlines, but it has been very steady,” he said. “It’s more of a bump-and-grind, old-school, stable market that doesn’t see the highs but also doesn’t get the lows.”
Cushman & Wakefield places the vacancy rate for the 10.9 million-square-foot Route 128 South market at 20.6 percent. While that is well above the 6 percent vacancy rate recorded a few years ago, it is significantly tighter than the 25.6 percent overall suburban office vacancy rate. Other markets have fared even worse, with the highest current vacancy at 31.7 percent in the Route 495 West market.
