New York Life Insurance Co. has reportedly agreed to lease a substantial portion of 130 Royall St. in Canton, a three-story office building which opened last year without any tenants. Sources said the deal is in the 80,000-square-foot range, which would make it one of the year’s largest direct leases.
Offering a bit of hope as the dour suburban Boston office market kicks off the second quarter, New York Life Insurance Co. has reportedly agreed to lease a substantial portion of 130 Royall St. in Canton, a three-story office building which opened last year minus any tenants. According to sources, the deal is in the 80,000-square-foot range, making it one of the largest direct leases of 2003.
Additional details of the pact remain sketchy, with New York Life leasing agent Mark Roth declining comment last week, and the building’s listing broker, J.P. Plunkett, remaining equally mum. “I’m unable to discuss that matter at this time,” was all Plunkett, a Cushman & Wakefield senior director, could offer when contacted by Banker & Tradesman.
Despite that, one broker familiar with the negotiations insisted that New York Life is the “mystery tenant” that has been circulating in the Route 128 South market during recent months. The insurance giant had supposedly narrowed down its focus to the Conroy/Lone Star property and an adjacent Class A office building delivered last year on a speculative basis by National Development of Newton.
“They are the winners,” the source claimed of Conroy/Lone Star. The broker was unable to indicate exactly how far along the discussions are or provide any information about whether a letter of intent has been signed. It is also unclear what may have swayed New York Life to choose the Royall Street option, although Plunkett said in a Banker & Tradesman article earlier this year that he believed his clients were marketing their space for less than National was at its property, the 183,000-square-foot BlueView Corporate Center. Plunkett also cited Royall Street’s minimal loss factor for space as another plus in attracting tenants.
In that article, Plunkett said Royall Street’s asking rents were in the mid-$20 range per-square-foot, compared to the upper-$20/low-$30 range for National’s space. BlueView broker Sean Teague, who was unavailable for comment last week, said in the earlier article that the building’s rate could be adjusted downward if the right tenant came along, but concurred there was a pricing chasm between the two properties.
Gaining Momentum
In any event, the New York Life lease should provide a bit of momentum for the suburban market, especially the Route 128 South submarket where Canton is located. A pair of Framingham companies with requirements in the 300,000-square-foot sphere shied away from Route 128 South when they began searching for options earlier this year, although most observers maintain that Framingham/Natick and Route 128 South have never interacted regularly when it comes to tenant migration. Those two firms, Bose Corp. and TJX Cos., are said to be concentrating on the MetroWest market, with Bose Corp. still reportedly negotiating a lease at a former Compaq Computer facility in Stow. Cushman & Wakefield broker Kevin Hanna, who is representing the landlord, declined comment last week on the status of the Bose lease talks.
As exemplified by New York Life’s latest search, the south suburban sector has traditionally been home to insurance companies, financial services firms and other old-line industries. While that focus has kept the 11.6 million-square-foot market from seeing dramatic jumps fueled by the introduction of new start-ups or technologies, brokers also maintain that it has enabled the south to avoid the precipitous declines in activity currently being experienced in high-tech markets such as Chelmsford and Lowell.
According to Spaulding & Slye Colliers, for example, the South market has a current availability rate of 22 percent, well below the 27.5 percent average for the suburbs overall. The submarket’s negative absorption of 18,000 square feet during the first quarter was also a fraction of the 333,000 square feet of negative absorption for all the suburbs in the first quarter, and the South market actually had positive absorption of 76,000 square feet in 2002. By comparison, the suburbs overall had negative absorption of 2.3 million square feet last year.
Even if National ultimately loses out to Conroy for the New York Life deal, most agree that the deal will benefit National by beginning to eliminate competition from a decidedly close competitor. The two buildings are expected to fare well in the long run, with a location near the South Shore suburbs offering a solid labor force and the properties considered convenient from a transit standpoint as well, given that they are sited at the junction of Interstates 93 and 95/128.
As for New York Life, the insurance giant is doing its part to help the region’s landlords, with the firm also recently inking an early renewal at Watermill Center in Waltham. According to officials for the landlord, New Boston Fund, New York renewed its 45,000-square-foot lease for seven years and simultaneously took a 10-year expansion of 6,500 square feet, making the two leases co-terminus. In the Watermill Center lease, Roth represented New York Life, while Trammell Crow broker Dave Campbell and Pamela Adamian acted on behalf of New Boston Fund.
Joe Clements may be reached at jclements@thewarrengroup.com.
