Trammell Crow Co. won a battle of leading real estate companies for the right to market space at 2 Ledgemont Center in Lexington. The property is located in the Central Route 128 area that has provided a boost for Boston’s suburban office market.

All of a sudden, there is a core competency in suburban Boston’s office market.

While fringe areas remain a bit frayed, the suburban version of Main and Main – the central Route 128 submarket – has undergone a dramatic resurgence over the past 18 months, leading the pack regionally in both office leasing and investment sales velocity, as well as in the recovery of office rental rates. According to industry observers, high-end assets such as the Bay Colony Corporate Center in Waltham and nearby Waltham Woods are now fetching rents in the upper $30-per-square-foot range, a level that seemed unattainable after vacancy rates in the submarket soared past 25 percent during the regional recession that took hold in mid-2001.

“There is a consistent demand for premium office space in Waltham,” Richards Barry Joyce & Partners Research Director Brendan Carroll concurred last week, calling the rental rates for top space there “eye-popping.” One source quoted a $38-per-square-foot pact recently signed at Bay Colony, the 1.1 million-square-foot office park overlooking Route 128 that was acquired last year by Beacon Capital Partners. The $272 million price tag paid by Boston-based Beacon raised many eyebrows at the time, but Waltham’s rebound now appears to be justifying the investment as the property heads toward the elusive $40-per-square-foot threshold.

According to RBJ, net effective rents in Waltham are nearly three times the rate they were just a year ago for premium properties, while 46 percent of all direct availabilities in the surrounding submarket were re-priced more expensively in the past quarter alone. RBJ produces a special report focused on top commercial buildings, an overview that showed such assets in Waltham currently have a 9.4 percent vacancy rate, half the 18.7 percent vacancy for the city overall.

Other industry professionals active in suburban Boston are also reporting halcyon times for the central Route 128 strip, which includes Bedford, Lexington, Wellesley and Weston. “The market is getting stronger and tighter every day,” said Trammell Crow Co. principal John J. Boyle III, whose firm recently represented UnitedHealth Group in one of the suburb’s biggest first quarter leases, a 10-year, 75,000-square-foot pact at Bay Colony.

‘Highly Competitive’
One example of the improving conditions can be culled from the battle conducted among leading real estate companies vying to represent Ledgemont Center in Lexington to fill 200,000 square feet left by the pending departure of Fresenius Medical Care Corp., a life sciences company relocating to Reservoir Woods in Waltham. The firm will be vacating all of 2 Ledgemont Center.

During the market’s economic slide, such an assignment might have been received somewhat tepidly, but one source termed the recent pitch “highly competitive,” with Trammell Crow Co. having emerged the choice of Ledgemont Center’s owners, the Beal Cos. of Boston. In confirming the selection last week, President Robert Beal said Trammell Crow was tabbed due to the firm’s “extensive office and laboratory leasing experience, significant national tenant representation relationships and depth and breadth of the project team.”

Trammell Crow is “excited” by the chance to represent Ledgemont, Boyle told Banker & Tradesman in acknowledging the designation. Designed by Jung/Brannen Architects of Boston, 2 Ledgemont Center features a prime location just off Route 2 near the Route 128 interchange, while Boyle also cited such amenities as a full-service cafeteria, health facility and on-site, structured parking.

“It’s a very special [property],” said Boyle, whose firm also will help Beal on leasing approximately 60,000 square feet available at One Ledgemont Center, a 175,000-square-foot building. In addition, the master-planned park can accommodate a third office building of 150,000 square feet that will also be offered to prospective tenants. Along with Boyle, other members of Trammell’s Ledgemont Center leasing team are principals Joseph Fallon and Brian Hines, Senior Vice President Keith Gurtler and Senior Associate Deborah Howerton.

Having won the Office Building of the Year Award from the Building Owners and Managers Association, 2 Ledgemont Center has the quality trappings to attract tenants, said Boyle, who also listed the experienced landlord as another key draw. To further position the property, the Beal Cos. is planning to invest $1 million in capital improvements, according to Boyle.

Besides the property’s various attractions, the lack of supply for six-figure space requirements also should help induce interest for Ledgemont Center, maintained Boyle. “If you are a large tenant out today looking for 150,000 or 200,000 square feet, there’s a very short list [of available options in central Route 128],” he said.

The lack of new construction does appear to be a temporary phenomenon, although space-starved tenants may have to wait a bit to reap the benefits of ambitious developers working to serve up new product in central Route 128. Boston Properties, for example, has already expressed interest in delivering another 500,000 square feet to the submarket, while the rising rental rates are expected to bolster other projects, as well.

RBJ and Spaulding & Slye both suggested that new construction is imminent for central Route 128 given the steady gains in the area. Spaulding & Slye reported 311,000 square feet of positive absorption in the submarket during the first quarter, more than half of the 547,000 square feet of positive absorption recorded for the suburban market overall. Along with the UnitedHealth Group lease, Raytheon took more than 100,000 square feet at 235 Wyman St. in Waltham.

Waltham and the surrounding area was not the only one enjoying a robust beginning to 2006, with the Framingham/Natick submarket still among the best performers. In addition, Carroll noted encouraging trends in the outer Interstate 495 belt. By RBJ’s estimates, I-495 has had 2 million square feet of positive absorption in the past seven quarters, or 37 percent of the amount of positive absorption registered in Greater Boston during that period. While I-495 still has an overall vacancy rate of 24.8 percent, Carroll said the steady activity bodes well for the future of the outer suburban communities.