55 Lyman St., Northborough
Providing a boost for the struggling industrial market, healthcare services giant McKesson Corp. has signed a 130,000-square-foot lease in Northborough at 55 Lyman St., a speculative, high-bay building developed by the Gutierrez Cos. The deal will allow the Burlington-based real estate firm to construct a similarly sized structure that will be conjoined with 55 Lyman St. The latter project is also forging ahead sans tenant.
The protracted McKesson deal, which was deemed dead at one point earlier this month, was announced during Tuesday’s mid-year commercial real estate overview co-sponsored by the National Association of Industrial and Office Properties and the Society of Industrial and Office Realtors. Cited by moderator Andrew Hoar as one of the few bright spots for the industrial sector, the lease agreement was one of several interesting tidbits unveiled at the annual NAIOP/SIOR event, held this year at the Seaport Hotel in Boston.
Hoar and a bevy of real estate experts told the packed crowd of 450 people that 160 Federal St. in downtown Boston is being placed on the market by Taurus Investments, while two prime suburban office properties along Route 128 are being offered for sale as well. In addition to Clock Tower Place in Maynard, which Banker & Tradesman reported this week is being peddled at a price topping $100 million, Hoar said Prospect Place and Prospect Hill in Waltham are also entering the active investment fray. Hoar’s firm, CB Richard Ellis/Whittier Partners, has been retained to sell the 1.1 million-square-foot Clock Tower Place, while Trammell Crow Co. will market 160 Federal St., a prime downtown Boston office/retail building which Taurus acquired in late 2000.
Economist Raymond Torto delivered a moderately optimistic keynote address at the NAIOP/SIOR overview, with the veteran researcher promising that a recovery is coming for commercial real estate, albeit at a snail’s pace. Others speaking included Spaulding & Slye Colliers principal William Barrack, suburban market specialist Mark Roth of Cushman & Wakefield and Trammell Crow Co. investment sales chief James McCaffrey.
NAI Hunneman Commercial Co. principal Wayne Spiegel seconded Hoar’s bleak outlook for the industrial market, although Spiegel stressed that newer product such as the Gutierrez building is generating healthy demand. Along with other modern features, 55 Lyman St. has clear heights above 30 feet. John Wilson of Richards Barry Joyce & Partners negotiated the McKesson lease for Gutierrez, while Trammell Crow Co. broker Paul Leone was agent for the tenant. San Francisco-based McKesson will be relocating its Massachusetts operations from Clinton. Calls to Gutierrez and Wilson were not returned, while efforts to contact McKesson representatives were also unsuccessful.
As for the office market, Boston has enjoyed two straight quarters of positive absorption to open 2004, Hoar told the audience, providing the Hub with more than 550,000 square feet of net absorption at the mid-year point after three straight years of negative outcomes. A combination of lease renewals and virgin deals have been cemented in recent months, said Hoar. Both 33 Arch St. and International Place have secured six-figure deals with new tenants, while Beacon Capital Partners continues to ink major leases in the Back Bay. Beacon not only lured Pearson Publishing from the suburbs to 501 Boylston St., noted Hoar, but also has convinced two existing tenants to remain in place at the John Hancock Tower complex. Ernst & Young has agreed to renew for 150,000 square feet at 200 Clarendon St., said Hoar, while another tenant has a letter of intent for 185,000 square feet at 200 Berkeley St.
Scant venture capital funding for startups has slowed Cambridge’s office and laboratory market recoveries, Hoar said, with lab rents down from $70 per square foot at their peak in 2001 to $40 per square foot today on a triple-net basis. Companies seeking 5,000-15,000 square feet of space dominate the Cambridge market at present, said Hoar, whereas any space user needing more than 100,000 square feet will find limited choices. Cambridge has posted positive absorption in the first half of 2004, said Hoar, whose firm estimates the figure at 209,000 square feet. The availability rate in Cambridge is now 21.9 percent for 19 million square feet of combined office and lab space, according to CBRE/Whittier, while asking rents are averaging $29.53 per square foot.
