The future remains unclear for 75 Sylvan St. in Danvers, which is owned by Applied Materials and has been vacant throughout the new millennium.
They are two of the biggest manufacturing properties north of Boston, but that is where the similarities end for 75 Sylvan St. in Danvers and the former Lucent complex in North Andover, at least as far as their near-term prospects are concerned.
With 1.5 million square feet of commercial space to peddle, the new owners of the Lucent facility are wasting little time putting their plan into action, with Ozzy Properties having just hired CB Richard Ellis/Whittier Partners to reposition and lease the hulking asset. Armed with a new moniker as the 1600 Osgood Street Commerce Center, CBRE/Whittier is marketing a mix of office, warehouse and manufacturing space at the building while helping Ozzy consider entirely new concepts for the 167-acre parcel, including retail, residential and recreational uses.
“It’s a very exciting project,” CBRE/Whittier principal Mark Reardon said last week. “It’s basically going to be a city within a city.”
A few miles away in Danvers, the future is less clear for 75 Sylvan St., which has been empty throughout the new millennium and appears likely to remain that way a bit longer.
Acquired by Applied Materials more than two years ago after being abandoned by Osram Sylvania, the 300,000-square-foot building was supposed to become a manufacturing operation that would produce ion implantation machines for the semiconductor industry, of which Applied is a global leader. When unveiled, the plan was seen as a boon for Massachusetts, promising the creation of hundreds of clean jobs at a time when the technology crash was just beginning to envelop the Bay State.
No Decision
The fanfare of those days, which included glowing predictions by erstwhile acting Gov. Jane Swift, has yet to be justified, with 75 Sylvan St. no closer to serving the semiconductor market than it was when Applied first stepped forward. “They’ve done absolutely nothing,” said one commercial real estate broker familiar with the property. “It’s still pretty much a shell.”
Interestingly, Applied has had several unsolicited offers among suitors looking to either buy or lease 75 Sylvan St. Among others, medical equipment firm Medtronic Inc. pursued the building prior to signing a 130,000-square-foot lease this month at Cherry Hill Park in Beverly. While such overtures would be welcome for most landlords stuck with an empty property, it appears Applied is more than willing to wait out the down cycle. Applied is “holding the facility for future use,” spokesman Steve Taylor told Banker & Tradesman.
“We haven’t decided yet what we are going to do with it,” Taylor said, adding, “We haven’t even decided when we’re going to decide what we’re going to do with it.
“We’re not looking to sell it, and we are not looking to lease it,” Taylor continued. “We are holding it and trying to get a handle on when we can make an intelligent decision based on economic factors and business factors as to when we are going to put it to use.”
To some observers, Applied may have a limited window of opportunity if it does opt to dispose of 75 Sylvan St., with investment activity expected to wane once interest rates begin to rise again, as is predicted to occur later this year. One source said a winning approach could be a sale/leaseback arrangement, with Applied’s strong credit likely to attract a bevy of capital sources in the current environment.
Reardon helped broker the sale of 75 Sylvan St. to Applied in early 2002 for $25.5 million. But while he said the California-based firm does occasionally speak with him about real estate matters, Reardon declined to discuss what Applied’s ultimate plan is for the still-vacant Danvers structure. “It’s a wonderful piece of real estate,” Reardon said when told of the industry ardor toward 75 Sylvan St., but he would not elaborate on how Applied might respond to the market.
One broker representing a large North Shore company said Applied was unmoved when approached with an offer to lease 75 Sylvan St., equaling a tepid response reported by a competitor with another tenant in tow. Depending on their geographic limits, the brokers might be better served exploring 1600 Osgood, with Reardon pledging that Ozzy Properties is eager to negotiate a deal.
“We are going to be going hard after anyone in the marketplace,” said Reardon, who is handling the leasing assignment with CBRE/Whittier brokers David Connolly and Jason Levendusky. Because Ozzy paid a bargain-basement price for 1600 Osgood St. – $15.8 million – Reardon said he believes the building can compete aggressively for tenants. Along with about 1 million square feet of high-end research/manufacturing space, there is also 300,000 square feet of office space and a like amount of warehouse space available for takers. Lucent continues to occupy a portion of the building, but its long-term presence remains unclear. Joining CBRE/Whittier in mapping the property’s repositioning strategy is Steven Druth of Druth Commercial Real Estate.
Securing the North Andover assignment was certainly a coup for CBRE/Whittier and Druth, with most major real estate firms having chased the opportunity. Along with quick access to Interstate 495, other features of the property include a massive amount of technology infrastructure. Some sources estimate that Lucent spent $40 million in recent years upgrading 1600 Osgood St., which was built in the early 1950s for Bell Labs and once employed nearly 14,000 people. “Something like this coming available has never occurred,” said Reardon. “It’s very unique.” Other features include an auditorium, cafeteria and well-appointed conference rooms.
