Home Depot has renewed a lease of 35,000 square feet at 15-45 Dan Road in Canton after considering other locations, including some outside Massachusetts.
It was the one that almost got away, but while the Home Depot’s Massachusetts office has been downsized substantially, the owners of 15-45 Dan Road in Canton have managed to retain the well-known building products company on the property’s tenant roster.
“We were happy to keep them on board,” Cushman & Wakefield Senior Director J.P. Plunkett told Banker & Tradesman last week after the tenant agreed to renew for 35,000 square feet in the hulking building. Totaling nearly 300,000 square feet, the building is owned by Great Point Investors, a Boston-based real estate investment and advisory firm. According to Plunkett, Home Depot was courted aggressively by other local landlords, with the company said to have considered about a dozen options before opting to stay put on Dan Road, including the possibility of departing the area – or event the state – altogether.
Even after committing to 15-45 Dan Road long-term, Home Depot did cut its space in the building down from about 90,000 square feet. The tenant did not have any broker representing them in the negotiations, while Plunkett and colleague Catherine Minnerly acted on behalf of the landlord. Plunkett declined to comment on the reduction in space, except to note that firms are doing their best to control expenses in the current economic climate. Calls to officials at Home Depot’s headquarters in Atlanta were not returned by press deadline.
Plunkett and Minnerly also teamed up on another just-completed South Shore lease, representing the owners of 300 Granite St. in Braintree in a 13,000-square-foot renewal with Fidelity Investments. Owned by Sun Life Insurance Co., the 18-year-old building totals just over 16,000 square feet in four stories, and is among the area’s better properties, according to Plunkett. Fidelity Investments was represented in that deal by Theodore J. Chryssicas, a senior vice president at Meredith & Grew Oncor in Boston.
“They are a great tenant to have,’ Plunkett said of Fidelity. “We were really excited to get that [lease] done.”
Cushman & Wakefield also was involved in one of the larger south suburban office deals of 2005 when Aviva Life Insurance Co. opted to take 107,000 square feet of space at 3 Batterymarch Park in Quincy. Announced several weeks ago, the 11-year commitment with the landlord, the National Fire Protection Association, ensures Aviva will stay put in Quincy after having been there since the early 1990s. Aviva is expected to move into the four-story building by next summer, with the firm planning to use 3 Batterymarch Park as its new headquarters.
Sluggish South
Despite that major lease and several other office agreements signed in the south-of-Boston office submarket, Plunkett said the activity slowed noticeably once the midyear point hit, although he and other observers credited the annual summer swoon in the commercial real estate sector as the main reason and not any sign that the regional recovery is backsliding.
“I think we will see things pick back up after Labor Day,” predicted Plunkett, who added there are several other deals percolating at present with which he and Minnerly are involved throughout the area. Plunkett would not elaborate on the clients, citing confidentiality agreements, but said “the pipeline gets thicker every week.”
According to Cushman & Wakefield, the overall south suburban office market totals more than 75 million square feet, including 24.7 million square feet in the Route 128 corridor, which has a current vacancy rate of 18 percent. That compares to 14.3 percent for the broader south office market such as Interstate 495 South and 16.7 percent for suburban Boston overall.
In its recent office market overview, Grubb & Ellis put the Route 128 South office market at an 18.4 percent vacancy level, estimating that net absorption did not even reach 55,000 square feet on the plus side through the midyear point. One good omen for current landlords is the lack of new office construction going forward, which Grubb & Ellis places at zero square feet for Route 128 South and 143,000 square feet for the Route 128 market overall. Grubb & Ellis tracks 53.8 million square feet of existing office space along Route 128.
In its report, Grubb & Ellis stated that, as a result of the light overall absorption for Route 128, vacancy remained flat at 17.3 percent, while Class A and B property asking rents held at $22.76 and $18.84 per square foot, respectively. “While the vacancy and availability levels are still high in the Route 128 markets, rents are expected to begin moving upwards in the next six months,” Grubb & Ellis said, meaning there could be an improvement by year’s end if the business climate stays on course with the national rebound.
Large tenant space requirements may not be as prevalent as they were in the past throughout the south region, but Plunkett said he is encouraged by a number of small and mid-sized companies that appear to be in a growth mode. Both he and Minnerly are also active on the industrial real estate side, and that arena also seems to be on the mend, he said, maintaining that sector will also have a strong finish to 2005. “We can’t wait to get going,” Plunkett said of the anticipated rush following Labor Day.
