Stoneham Executive Center plans currently being floated by the Gutierrez Cos. would yield 900,000 square feet of office space, including renovation of Boston Regional Medical Center facilities totaling 400,000 square feet at the site.

Hurry up and wait. In many respects, that is the challenge for the commercial real estate market at present, and certainly is the condition confronting the developers of the former Boston Regional Medical Center in Stoneham.

Already coping with a sharp downturn in the suburban office market, the Gutierrez Cos. of Burlington is simultaneously facing community opposition for its planned redevelopment of the Stoneham property into a Class “A” business park. The latest blow occurred two weeks ago when the state’s Executive Office of Environmental Affairs thumbed its nose at a supplemental draft environmental impact report aimed at addressing traffic congestion, drainage and other issues related to the proposal.

The planned Stoneham Executive Center, which would ultimately yield more than 900,000 square feet of office space, does have the support of the town of Stoneham, but officials and residents in Malden and Melrose maintain that their communities would bear the brunt of negative impacts stemming from the $50 million project. Hundreds of letters were filed in response to the SDEIR, some in favor but many vehemently against the development as it is presently conceived.

In their critical review of the SDEIR, state environmental officials agreed that the development would dramatically increase traffic, in some cases by up to 50 percent at peak travel times, and said mitigation suggested by the developers would actually reduce the amount of parkland in the area. In addition, the EOEA maintained there is too much reliance on vehicular traffic and not enough emphasis on public transportation alternatives, such as providing a shuttle bus to the Orange Line system in Melrose.

The Massachusetts Water Resources Authority has also weighed in on the project, voicing concerns about runoff flowing into the nearby Spot Pond. The MWRA would like to see a greater explanation of how such runoff can be avoided or limited, and is also calling for a replacement of drainage pipes in the area to further resolve that matter.

Efforts to reach the Gutierrez Cos. were not successful, making it unclear how the firm plans to handle the EOEA concerns and the delays in getting the development approved. Some residents maintain that the best way to garner their support would be by downsizing the project. As it is currently proposed, Stoneham Executive Center would include the construction of three new office buildings totaling 500,000 square feet. The main hospital building and accompanying structures account for another 400,000 square feet of existing inventory, much of which would also be renovated into office space.

Critical Reservations

The EOEA previously asked for, but did not receive, an alternative to the full build-out plan envisioned by Gutierrez. Agency officials indicated they are particularly sensitive to the Stoneham project because it is located within the Middlesex Fells Reservation, a conservation area controlled by the Metropolitan District Commission. Any final proposal will have to better explain how it will deal with the protection of that protected acreage, the EOEA report added.

In the meantime, as it works to gain community backing for the project, the Gutierrez Cos. is also challenged by the region’s economic woes and its harsh impact on the office market. Once seen as an alternative to pricey Cambridge and one of the few expansion options for growing companies north of Boston, Stoneham Executive Center’s appeal has been somewhat blunted, with huge tracts of cheap, affordable sublease space cropping up throughout the suburbs. By some estimates, there is more than 11 million square feet of sublease space in Boston’s suburbs, and many of the firms holding such options are willing to accept lowball offers to get a sublease completed.

In addition, rental rates have continued to plunge in core areas such as Cambridge, making it less mandatory for firms to look outward when considering future space requirements. According to Insignia/ESG, the 15.8 million-square-foot Cambridge submarket has an availability rate of 20.4 percent, compared to virtually zero availability when Gutierrez acquired BRMC in 2000 for $20 million.

Gutierrez is also facing competition in the suburban market, with Trammell Crow Co. recently reporting that the overall vacancy in the suburbs has soared to 24.5 percent, surpassing the record rate recorded at the depths of the market downturn in 1990. The Route 128 Central market has an alarming vacancy of 27.3 percent, second highest among the eight suburban submarkets tracked by Trammell Crow. Indeed, only Interstate 495 South and its 27.8 percent mark has a higher vacancy than Route 128 Central.

Along with future development possibilities, such as the InWood Office Park on the Woburn/Reading line, Gutierrez is coping with several localized subleasing opportunities, including a whopping 290,000 square feet being offered up by Genuity on Commerce Way in Woburn. By Trammell Crow’s estimates, just over 1 million square feet of new supply was added to the suburban market in the first half of 2002, although more than half of that was pre-leased.