Watch out, all you fat and happy Boston and Cambridge developers; the suburban office market is on the comeback trail.
Waltham has surpassed Cambridge in the total size of its office market amid a surge of new construction over the past few years, with Burlington, Needham, Watertown and Marlborough all seeing significant new development as well, stats from Colliers International show.
New office construction and lab construction in Boston’s suburbs is finally starting to take off after years of sluggish growth following the Great Recession, with the Watch City leading the way.
Now, we’re not quite back to prerecession construction levels. And we may never get back to the golden days of the 1980s when millions of square feet of new suburban office spreads were pouring onto the market each year, but when it comes to new development, the 128 belt and, increasingly, the 495 belt, are moving in the right direction.
The office vacancy rate along 128 is 13 percent, down from more than 20 percent five years ago, notes Rob Byrne, a senior vice president at Transwestern/RBJ, with companies gobbling up 6.5 million square feet of previously empty space.
Moreover, it’s not just the amount of development that’s going up, but the quality of it – suburban developers are adding restaurants, stores and shops in order to compete with amenity-rich urban markets like Cambridge and Boston.
“Tenants want urban amenities in a suburban setting, and landlords have reacted to that,” Byrne said. “128 is changing – the access to amenities is changing. It’s getting better.”
All told, well more than 1.4 million square feet of new office and commercial space is under development along Route 128, with hundreds of thousands more in additional stores, shops and restaurants.
And roughly 60 percent of that new office development is taking shape in Waltham, long a favorite of developers and corporate decision-makers thanks to its strategic position at the intersection of 128 and the Massachusetts Turnpike, and its proximity to the mansions and estates of Wellesley, Weston and Lincoln, among others.
The Waltham office market now tops out at just under 13 million square feet, ahead of Cambridge’s 11.3 million square feet, Colliers International reports. (Of course, the Cambridge lab market, at more than 9 million square feet, still dwarfs Waltham’s much smaller, but still sizeable, 1 million square feet of lab space.)
And the Waltham market is poised to take another big step forward with a trio of new developments taking shape along Route 128 that will add another 600,000 square feet of space, stats from Colliers International show.
Boston Properties is well into construction of 10 CityPoint, a new, 230,000-square-foot office project slated to open next year, while Hobbs Brook Management is on track to deliver a new, 302,000-square-foot office building this year at 275 Wyman St., Colliers notes.
And let’s not forget the 120,000-square-foot office building that is part of the much larger, 1.2-million-square foot redevelopment of the old Polaroid site into a lifestyle center featuring a new Market Basket and a bevy of other stores and shops.
All three projects boast blue-chip tenants, with BXP nabbing Wolverine for CityPoint, Hobbs Brook cutting a deal with Vistaprint for its Wyman Street complex, and the developer of the old Polaroid Property luring the regional headquarters for footwear giant Clarks Americas.
And Waltham’s hottest new office projects are getting some pretty healthy rents, with top deals in the range of $45 to $46 a square foot – still a bargain compared with Boston and Cambridge, but nothing to sneeze at, either, JLL’s Boston research team notes.
Expanding The Market
But the competition is fierce, with new developments in other locales along the 128 corridor nipping at Waltham’s heels and providing an alternative to increasingly expensive office towers and buildings in the urban core.
The $500-million redevelopment of Northwest Park and the creation of a “restaurant row” anchored by a new Wegmans has transformed Burlington, making it a top destination for companies looking for suburban space with urban-style amenities. Gutierrez Co. is now moving ahead with plans for a 100,000-square-foot speculative office building in the town as well.
New England Development’s University Station project, just off Route 128 in Westwood, is following much of the same playbook, leading with hundreds of apartments, followed later by offices.
Meanwhile, Needham will soon be home to the new 290,000-square-foot headquarters of Trip Advisor, one of the state’s hottest tech companies.
The rising suburban office market is even reaching out to 495, which has been struggling since the dotcom bubble imploded since the early 2000s.
Marlborough took its biggest hit in the aftermath of the Great Recession, when Fidelity bailed on its long-time campus and Hewlett-Packard dumped its campus.
TJX scooped up the old Fidelity campus, while the old HP campus is being transformed by a 200,000-square-foot Quest Diagnostic plant, a 350-unit Avalon Bay apartment development and a new Hilton Garden Inn.
The resurgence on 128 and the budding comeback on 495 are good news for companies looking for alternatives to ever more pricey Boston and Cambridge digs.
In fact, with downtown Boston rents expected to spike by as much as 30 percent over the next few years, we could very well see a surge of companies headed out to 128 and regions beyond.
Stay tuned, because it should get even more interesting.