“Innovate or die” is the rallying cry of the tech elite, but it’s just as appropriate a slogan these days for suburban commercial landlords trying to keep properties relevant to 21st-century work and living preferences.
In many cases, the preferred option is to start from scratch.
In North Andover, a developer has begun converting a complex anchored by the Converse Inc. headquarters into apartments, shops and smaller office spaces. Along Route 128 in Needham and Waltham, Normandy Real Estate Partners and Hobbs Brook Management are spending hundreds of millions to demolish or gut rehab Cold War-era office buildings and replace them with build-to-suit corporate headquarters and mixed-use campuses.
The departure of a long-time anchor tenant is frequently a catalyst for a top-to-bottom reimagining of a property.
“We’d been keeping an eye on what was happening, because we knew Schneider Electric and Converse had leases coming up,” said David Steinbergh, a principal with RCG LLC of Somerville, which acquired the West Mill property in North Andover last year for $15 million. “Once we knew they were leaving, it didn’t make much sense to have a single-tenant corporate campus approach.”
Schneider Electric moved out of 230,000 square feet in April when it relocated to a new headquarters in Andover. Converse will vacate another 155,000 square feet in April as it moves to Lovejoy Wharf near Boston’s North Station.
Steinbergh said RCG’s goal is to replicate its successful redevelopment of the previously-vacant 235,000-square-foot East Mill complex, which it acquired in 2007. Located across the street, that property is now 90 percent occupied by offices, restaurants, wellness providers and 27 loft apartments renting for $1,800 to $2,200 a month.
Since acquiring the 16-acre West Mill complex in February 2014, RCG has added 12 new tenants including Leapyear Publishing, Maker Mill and Acelleron Health and Wellness. Approximately 350,000 square feet is still available, and Steinbergh said a small tenant leasing strategy seems more realistic than trying to attract one or two large corporate users.
To breathe more life into the complex, RCG wants to convert part of the space into loft-style apartments and other areas into retail and restaurant space. Construction of 17 lofts will begin within weeks. RCG is in permitting for a master plan of the property that could include a larger residential component, Steinbergh said.
“We’d like to have a little more balance and bring in more apartments and more 24-7 activity,” he said.
As part of the West Mill project, RCG will demolish an 80,000-square-foot former manufacturing building to create a 120-space parking lot in the center of the site.
Clean Slate In Waltham
Few developers have a longer-term perspective on the Route 128 suburban market than Hobbs Brook Management. The Waltham-based company has owned the 13-building Hobbs Brook Office Park since its inception in 1954.
In 2012, executives took a hard look at the future of 275 Wyman St., a 90,000-square-foot multi-tenant office building that was approaching obsolescence.
“We started talking about it and kicking the tires. It was getting a little outdated, and it was just time,” said Patricia Holland, a real estate manager and leasing specialist for Hobbs Brooks Management.
The company began arranging for tenants to relocate in other buildings within the park and hired Margulies Perruzzi Architects of Boston to design a new 315,000-square-foot office building for up to four tenants. In 2013, Lexington-based promotional materials company VistaPrint agreed to lease the entire building for its new headquarters.
Nearing completion this summer, the building was designed with all the latest trappings. A vast majority of the space has open floor plans and floating ceilings with exposed utilities, said Santo Dettore, construction specialist with Hobbs Brook Management.
Normandy Bets On Needham
In Needham, a first-generation industrial park is in line for what a developer calls “the most different office space on Route 128 offered to date,” with yoga studios and cafés side-by-side with office and innovation space.
“We’re going to try to bring a product type that is a little bit different than the market has seen before,” said Mark Roopenian, a principal in Normandy Real Estate Partners’ Boston office.
Morristown, N.J.-based Normandy also proposes a 400-unit residential complex on the 27-acre site, which it acquired in December for $54.5 million.
Developed by Cabot, Cabot & Forbes in the 1950s, the park contains 500,000 square feet of office space in primarily one-story brick buildings. The current tenant, General Dynamics’ Mission Systems division, will move to 100 Rustcraft Road in Dedham by year’s end. With the looming availability, the park was a natural for a complete makeover, Roopenian said.
Normandy is leaning toward retaining and renovating the buildings, because of their 16-foot ceilings and many office tenants’ preference for workspaces with an industrial feel. The buildings would be gutted and redesigned with new atriums, lobbies and skylights to maximize natural light, Normandy vice president Jamie Nicholson said. Service retail and food vendors would be incorporated alongside the office suites.
Estimated cost of the redevelopment, which also could include new construction, is over $300 million.
Keeping in line with the live-work-play model for mixed-use projects, Normandy will propose a 400-unit residential complex on land currently occupied by a parking lot. Permitting on the Chapter 40B project including an affordable housing component is expected to begin in a few weeks.
“In order for us to incentivize full development in that area, we have to have some element of housing,” said Devra Bailin, Needham’s economic development director. “You have to have a place for workers to live, and people don’t want to be traveling to work every day for an hour or more.”
The projects are a victory for Needham officials, who recommended increasing height and density in the commercial district between Route 128 and the Charles River. The goal was to allow taller office buildings that are more visible from Route 128 and lure higher-profile corporate tenants, Town Manager Kate Fitzpatrick said. The town also hired a branding consultant that came up with the name “Needham Crossing” to describe the commercial district, previously known as New England Business Center.
Normandy also owns the adjacent Center 128 West property where the 290,000-square-foot TripAdvisor headquarters is nearing completion. TripAdvisor has an option to build an additional 150,000 square feet and the property has an additional 350,000 square feet of build-to-suit space available.
Together, the properties will become a “superpark” reenergizing the central 128 market, Roopenian predicts.
“If somebody wants a brand-new build-to-suit corporate headquarters, we could accommodate that. If somebody can’t wait 18 months, we have (renovated) space that we could deliver in eight to 12 months,” he said.
Email: sadams@thewarrengroup.com
