It was a difficult loss for the health care industry, but the closing of Boston Regional Medical Center in Stoneham may prove to be a healthy development for the region’s commercial real estate market.

Barely a year after the operators of the 195-bed facility filed for bankruptcy, throwing nearly 1,000 people out of work, a Burlington real estate firm has acquired the sprawling complex and is peddling it as a mix of office and biotech space. Although the Gutierrez Co. has not yet received final zoning approvals from the community, current estimates are that upwards of 800,000 square feet of space could ultimately be generated on the 41-acre site.

Company principal Arturo Gutierrez Jr. declined comment on the matter until negotiations with the town are complete, but exclusive leasing agent David Wright of CB Richard Ellis/Whittier Partners said he believes the site will offer space-starved tenants in Boston and Cambridge an attractive option they previously did not have. Indeed, what is now being called Stoneham Research Park is situated well before the cluster of office parks that can be found up the road on Montvale Avenue in Stoneham or at the Interstate 93/Route 128 cloverleaf in Woburn.

“It can really be defined as a suburb of Cambridge,” said Wright, noting the Stoneham Research Park is barely five miles from East Cambridge and just seven miles from downtown Boston. “I think we are going to do very well drawing from both [Cambridge] and Boston.”

Gutierrez closed on the property last month for $20 million, well below the $31.4 million appraisal price set by hospital officials. According to Thomas A. Walsh, senior managing director of Insignia/ESG in Boston, Gutierrez was able to secure the site for a lower price because the firm submitted an offer that was difficult to beat. One key strength for the creditors committee that hired Insignia to market the property, as well as the bankruptcy court, was that Gutierrez placed few contingencies on his offer, whereas other suitors were more cautious in their bidding.

For his part, Wright said he believes the company’s background as an experienced developer and construction firm gave Gutierrez the confidence to pursue the former hospital site. Subsequent inspections appear to justify that gamble, Wright said, particularly considering how hot the commercial market is at present.

Among the pluses, according to Wright, is a lightly traveled access road that gives two exit options from I-93, which can be seen prominently from the hospital grounds. Surrounded by thousands of acres of conservation land, and with Spot Pond directly in front of the main entrance, the parcel should also be attractive to tenants who are concerned about quality-of-life issues, especially in a tight labor market where such matters can be a strong recruiting tool. The office/research buildings that will be constructed along higher portions of the parcel will also enjoy views of downtown Boston and even the Atlantic Ocean.

“In terms of aesthetics, [Stoneham Research Park] is kind of the Bay Colony of the North Shore,” said Wright, referring to the Class A office complex in Waltham. “The surroundings are really beautiful.”

Wright said he also believes the main hospital building and adjacent properties will be attractive to biotech companies, especially those firms needing space over the short term. Upwards of 300,000 square feet of existing space could be available on a short-term basis, he said, noting that the main building has adequate plumbing and floor loads needed for biotech research.

Another bonus for biotech users is the presence of the Lahey Clinic in the project, Wright said. The Burlington-based institution has a partial interest in the new ownership structure and has already announced plans to operate some functions out of the park, with more than 100,000 square feet of space anticipated from that operation. The clinic is in the process of determining which functions will be run from the park, Wright said, but whatever they might be, he predicted the clinic’s involvement will spark additional interest from the research community.

“Lahey is going to be a big help” in marketing the property, said Wright.

Walsh said he also expects good things to come from the Gutierrez acquisition, agreeing with Wright that the complex will serve as a natural outlet for Boston and Cambridge. As part of its marketing effort, Insignia/ESG did some outreach to companies in those communities, Walsh said, and had a warm reception overall. Although there are zoning issues that must be worked out, he said Gutierrez is poised to succeed in such a solid economy.

“I think they are going to do very well with it,” he said. “It’s a real winner.”

Growth Area
Insignia also does not see the BRMC situation as an isolated incident. Following the successful marketing effort of BRMC, the real estate services firm has decided to pursue additional medical facility sales. Given the consolidation of the health care industry, Walsh said he believes it will be a strong growth area in the coming years, one that will require an experienced marketing group to understand what uses make the most sense for a given property. In fact, Insignia/ESG was among the first to suggest the hospital would make a strong location for an office park, eschewing initial proposals to sell the property for a hotel conversion.

Insignia/ESG will offer its specialized service to owners of medical facilities in various situations, including those that need to liquidate a property due to fiscal problems, as well as institutions that wish to dispose of a piece of their holdings to realize a financial upside. Such properties might include an entire hospital, a medical office building or an assisted living center.

“We think there is going to be a continued consolidation of the medical field, and we want to be prepared to take advantage of that,” Walsh said. “No matter what the changes are, the bottom line is there is real estate [to deal with] at the end of the day, and that is where we can help.”

Stoneham Health Complex Resuscitated as Office Park

by Banker & Tradesman time to read: 4 min
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