Responding to a surge of demand in communities north of Boston, several developers are preparing to move ahead with new office projects in the area, including a 160,000-square-foot building planned for the Edgewater Office Park in Wakefield.
In another twist, developer Edward Callan said last week that he has opted against selling his planned InWood Office Park on the Reading/Woburn line, and instead is preparing to bring a partner in to help move the ambitious project forward. InWood, sited just a few feet off Interstate 93, is a 57-acre property approved for 850,000 square feet of space.
According to industry sources, Verizon will take an estimated 100,000 square feet in the Edgewater property, which will be built by MMBT, the development arm of Factory Mutual Insurance Co.
Meanwhile, the Beal Cos. is also preparing to construct an office building in Wakefield, while National Development reportedly will add another 150,000- square-foot building at its sprawling Metro North Corporate Center in Woburn.
“People are finding aggressive, creative ways to provide product to the market,” acknowledged Spaulding & Slye broker Tamie R. Thompson, who said there has been “tons of activity” in that sector during the first half of the year.
The suburbs overall have a vacancy rate in the 6 percent range following a first quarter that saw nearly two million square feet of net absorption. Numbers for the second quarter are not available, but Thompson said there has been little slowdown in the subsequent three months. Of the 7.8 million square feet of tenant requirements, nearly five million is focused on the core Route 128 stretch from Wellesley to Wakefield.
“In that North section, there’s obviously some confidence in the market,” Thompson added. “Anybody who can get the financing and get in the ground should do well.”
One project Thompson has been involved in, for example, has seen rental rates jump significantly of late. Six Kimball Lane in Lynnfield, now 85 percent leased, has seen rents rise from a $25 asking rate last fall to $33 per square foot today. The 100,000-square-foot building has just 15,000 square feet left, Thompson said. Many communities, including Burlington, are now averaging $40 per square foot for Class A space, she said.
Verizon, a recently formed telecommunications company that includes Bell Atlantic, has a division currently located at Woburn’s Unicorn Park that has been searching for a new home during the past year. Bell Atlantic/Verizon has reportedly settled on the Edgewater park, which is permitted to construct a pair of 160,000-square-foot buildings. According to one source, who said that Verizon has signed a letter of intent for the space, MMBT will build the first building with Verizon as its anchor tenant, and is mulling over whether to move forward with the second structure as well. A spokesman for CB Richard Ellis/Whittier Partners, which is consulting on behalf of Verizon, declined comment on the matter, while calls to MMBT were not returned by press deadline.
Also keeping mum is the Beal Cos., which did not return a phone call last week regarding its plans for the Quannapowitt Parkway development. According to a source, however, Boston-based Beal is eyeing a 140,000-square-foot building and has been talking about an aggressive timetable.
“I think they want to go spec this year,” said the source, who noted the tight market might score a tenant for the building before it reaches that point. The building would be placed in front of 100 Quannapowitt Parkway, providing strong visibility from Route 128. The park is home to Darwin Partners.
The National Development undertaking is just the latest building slated for that 100-acre park, which is located across I-93 from InWood. Calls to National were not returned by press time, but a source said the firm is proposing a 150,000-square-foot building that would also begin on a speculative basis. Given the solid activity at the park, which has Genuity taking 435,000 square feet, observers said they believe National also has a good chance of signing a tenant before completion of the building.
On the InWood development, Callan said last week that he has decided against selling the park en masse to a corporate user, and is instead negotiating with several financial partners to get the project off the drawing boards.
“They just take too long to analyze and study everything,” Callan said of dropping the corporate campus concept. “They are too slow, and we need to proceed.”
Callan said he believes the arrival of Genuity at Metro North will help legitimize his location, maintaining that “it has helped us tremendously.” If a deal can be struck with a financial backer, Callan said they would begin construction of two or three of the planned five buildings without a tenant. The initial buildings would be 24,000, 84,000 and 216,000 square feet, Callan said, agreeing that market conditions warrant such action.
“Everything is proceeding on spec,” he said. “It is a change in strategy from what we were looking at four or five months ago … but the market is strong enough, thank God. That is really helping a lot.”
