STEPHEN MURPHY
‘Bright future’ for property
It looks like Raytheon Inc. is saying “so long” to Seyon. Five years after selling its manufacturing plant on Seyon Street in Waltham, Raytheon is reportedly preparing to move its remaining operations from the sprawling 77-acre complex, at which the defense industry giant once employed more than 4,000 people. According to real estate sources, Raytheon has begun a space quest in the suburban west market, reportedly eyeing alternatives throughout Greater Waltham and as far north along Route 128 as Burlington.
“There are plenty of options for them to look at” despite Raytheon’s space needs being one of the larger requirements in the area, said one source. McCall & Almy of Boston has been retained to represent Raytheon on a leasing assignment, principal Leonard C. Owens confirmed last week, but the veteran broker declined to provide any specifics on the size or scope of the search. Industry sources claim Raytheon is seeking approximately 150,000 square feet, while the firm is said to be considering both existing space and potential build-to-suit opportunities. The company’s lease is set to expire late next year, according to sources, one of whom characterized the chances of Raytheon renewing at Seyon Street as “very unlikely.”
“I don’t see that happening at all,” said the source, citing both infrastructure shortcomings in the property and the tenuous nature of the ownership. Lender UBS Warburg took the asset back in 2003 after efforts to create a 1.2 million-square-foot technology center there failed. A partnership of Saracen Development of Newton and Texas-based Highgate Holdings purchased the complex from Raytheon in December 1999 for $38.7 million.
Acquired at the height of the telecommunications boom and renamed iPark, Raytheon leased back 360,000 square feet from the new owners on a short-term basis, but has reportedly been reducing its occupancy in the property over time in anticipation of the lease expiration. Meanwhile, efforts to lure telecommunications tenants were hurt by the technology crash, forcing the property into the 2003 foreclosure predicament that resulted in UBS Warburg taking control.
Stephen Murphy of Lynch Murphy Walsh Advisors has remained as leasing agent of the Seyon Street asset after previously representing Saracen and Highgate in a similar role. Murphy declined to discuss the Raytheon situation, but said UBS is trying to stabilize the asset through leasing to companies. And while the telecom bust cratered similar development plans throughout the area, Murphy insisted that the Seyon Street complex can be turned around.
“We have been slowed somewhat by the market, but I do think it has a bright future,” said Murphy. “It could be a viable option for a lot of [companies].” Besides access to several bus lines and commuter rail service into Boston, Murphy cited a generous parking ratio and the property’s location inside Route 128 as strong advantages, as well as the close proximity to downtown Waltham and its various amenities.
Murphy did acknowledge recent talk that some of the property could be diverted to other uses, such as retail or residential units, but added that there is no firm plan in place to pursue such alternatives. As far as office space and similar uses, Murphy said there are indications that the local economy is on the mend, spelling better times ahead and sparking greater velocity from prospective tenants. “Once we get a little bit of traction, I think we will be fine,” said Murphy.
Indeed, the Route 128/Massachusetts Turnpike office market has been especially robust in recent months. According to Spaulding & Slye Colliers, that submarket enjoyed nearly 1 million square feet of net absorption in 2004, dropping the vacancy rate to 15.8 percent by year’s end. The latter figure also compares favorably to the 20 percent vacancy rate recorded in Waltham in 2003, with that area brutalized by the prolonged recession and the problem exacerbated by its dependency on the technology industry.
End of an Era
Raytheon’s own space requirement is just the latest generated by the firm in recent years, including several deals that have altered the region’s office market landscape. The most notable change occurred in 2002 when the firm announced a plan to relocate its headquarters from Lexington to 870 Winter St. in Waltham. The firm subsequently opened a state-of-the-art, 150,000-square foot facility on the site in 2003. Raytheon simultaneously sold its former headquarters – where it had been based since 1961 – to Patriot Partners LLC, which is in the process of converting that 95-acre property into a multi-tenanted business park.
Raytheon also rocked the northern suburban market in 2003 when it agreed to relocate its operations from Bedford to 225 and 235 Presidential Way in Woburn, a two-building office complex made available by the failure of its lone tenant, Genuity. That 435,000-square-foot lease proved to be among the largest in suburban Boston in 2003 and filled a major space hole in the Woburn market.
As for the Seyon Street facility, Raytheon’s departure would certainly end an era at the property, having once served as Waltham’s largest employment center. Housing Raytheon’s equipment division, the 10-building complex involved work in the radar, communications and air traffic control fields until the firm began moving employees to other nearby locations in the 1980s and 1990s.
Among the prospective properties being considered for the new Raytheon requirement is 300 Baker Ave. in Concord, according to sources, with company officials recently touring that property. As Banker & Tradesman reported last month, longtime tenant Avaya Inc. is preparing to move from 300 Baker Ave. to a new headquarters in Chelmsford in the coming months. Totaling 400,000 square feet, 300 Baker Ave. was recently purchased for $44 million by a California-based investment group.
Joe Clements may be reached at jclements@thewarrengroup.com.
