Hoping to take advantage of a cluster of biotech and medical-related companies in the surrounding area, Patriot Partners has promoted the 95-acre Lexington Technology Park as a haven for life sciences companies. The site boasts an available mix of existing space and new development sites, an option reportedly being considered by Fresenius Medical Care North America.
Presenting one of the larger tenant prospects in suburban Boston this year, Fresenius Medical Care North America is seeking more than 200,000 square feet of office space in the Route 128/Massachusetts Turnpike submarket, sources have told Banker & Tradesman. Currently based at 95 Hayden Ave. in Lexington, Fresenius is reportedly the mystery company that has been discussing a major build-to-suit deal at the neighboring Lexington Technology Park.
“It’s a big requirement, for sure,” said one broker familiar with the assignment. Indeed, the source maintained it could be the largest space search under way at present along the central Route 128 corridor, with CB Richard Ellis/Whittier Partners said to be representing Fresenius, the world’s leading kidney dialysis company. According to some sources, the company is currently focused on three possibilities: staying put at 95 Hayden Ave., which is owned by the Beal Cos. of Boston; pursuing the build-to-suit with Patriot Partners LLC at Lexington Technology Park; or taking space at Reservoir Woods in Waltham, a 537,000-square-foot business complex owned by the Davis Cos.
Patriot Partners officials declined to confirm whether Fresenius is the heretofore unnamed firm being courted during the past month for a new building at Lexington Technology Park. The former Raytheon Corp. headquarters was acquired in 2002 for $51 million and is now being converted into a multi-tenanted office/research complex by developers Stephen C. Rice and Joseph L. Zink, along with their New York-based capital partner.
Hoping to take advantage of a cluster of biotechnology and medical-related companies in the surrounding area, Patriot Partners has promoted the 95-acre park as a haven for life sciences companies, with a mix of both existing space and new development sites available. Already this year, Lexington Technology Park has landed two sought-after companies to take space in the complex, with NitroMed inking a 52,000-square-foot agreement and Hypnion Inc. leasing just under 34,000 square feet. The build-to-suit facility with the prospect believed to be Fresenius is estimated at 220,000 square feet.
Calls to CB/Whittier officials were not returned by press deadline. Also not responding to inquiries about Fresenius were officials at the Beal Cos. and the Davis Cos., although sources claimed that both landlords remain in the running to retain or land the company. According to one source, the Fresenius lease at 95 Hayden Ave. expires in late 2007, but the firm has an option that would allow it to escape in 2006. The Davis Cos. is proposing to create a $200 million office/research campus at Reservoir Woods, a 56-acre tract that the firm purchased in 2001 in conjunction with Prudential Real Estate Investors. Formerly owned by Polaroid Corp., the complex also has a mix of existing space and future development opportunities.
“It would be a great fit” for Fresenius, one broker claimed of Reservoir Woods, although it is unclear whether company officials are favoring any particular destination over the others, or whether any formal commitments have been made by the tenant. One of the sources said it appears the firm is not looking at properties far beyond its current borders, most likely due to employee retention considerations. It is “unlikely,” opined the source, that Fresenius would ever consider taking space in downtown Boston, as some suburban tenants such as Pearson Publishing have done this year.
Momentum Swings
If Freenius does stay local, the lease would certainly be a plus for the Route 128/Massachusetts Turnpike submarket, which has undergone dramatic momentum swings in recent years. According to Spaulding & Slye Colliers, the vacancy rate for that office market was just 1.4 percent after the third quarter of 2000, compared to 17.4 percent at the same mark in 2004. Part of the hike has been from a substantial increase in office supply, with Spaulding & Slye estimating that the inventory has risen by 3.5 million square feet during that time frame, exacerbating the concurrent trend of companies subleasing existing space in large quantities.
Despite a difficult stretch to start the new millennium, the Route 128/Massachusetts Turnpike submarket is enjoying a solid 2004 in leasing velocity. At the third- quarter pole, the submarket had seen more than 290,000 square feet of net absorption, representing nearly 30 percent of the 1 million square feet of positive net absorption posted throughout the 79.3 million-square-foot suburban office pipeline in Greater Boston.
The core Route 128 region has also fared better than most suburban locales on the rental rate. According to Spaulding & Slye, asking rents for that submarket are averaging $22.28 after three quarters, making it the only Greater Boston suburban submarket exceeding the $20-per-square-foot plateau. The Northwest submarket is the closest at $19.69 per square foot, whereas the suburban average rental rate is $19 per square foot. Cambridge asking rents are averaging $24.95 per square foot, while Boston has an average rate of $34.01 per square foot.
