Woburn-based Cummings Properties broke ground last week on a 26,000-square-foot building at the Wilmington Business Park.
High vacancy rates and a sluggish beginning to 2006 in some communities north of Boston has not dampened enthusiasm for the area’s office market, or so it would seem from a new Cummings Properties building breaking ground last week in Wilmington and sales negotiations on several commercial real estate assets along that same stretch of Interstate 93 near its connection to Interstate 495.
As Essex River Ventures moves toward its purchase of the R.J. Kelly office/flex portfolio in Wilmington and Andover, Griffith Properties reportedly is negotiating to buy 181 and 187 Ballardvale St. in Wilmington. The pair of office buildings is located directly across from the 200 Ballardvale St. complex that Boston-based Griffith acquired last year as part of a value-added development play. Totaling 200,000 square feet, 181 and 187 Ballardvale St. had been under agreement to Direct Invest, but that entity recently backed out late in discussions.
While admitting interest in the opportunity, Griffith Properties founder J. Brad Griffith last week declined to discuss the status of negotiations or say how much of a commitment, if any, has been made to date. “If you’re the major abutter, you have to look at it,” Griffith said, but added, “I’m not going to confirm anything” beyond that acknowledgement.
The two buildings are owned by BPG Ltd., a Philadelphia real estate investor which acquired them in 1998 for $18.2 million. BPG Ltd. Vice President Albert J. Corr would only say that the buildings are under agreement to an unspecified party. Regardless, sources insisted that Griffith is the suitor for 181 and 187 Ballardvale St. “That’s them,” one broker familiar with the deal claimed of Griffith. A sales price was not available for the asset, which does reportedly generate substantial cash flow, with just 13,000 square feet unleased.
“I’m pretty happy with that,” Corr said of the occupancy level at the park, which was only 65 percent rented as recently as 2003. Among the deals cemented there since was last year’s 58,000-square-foot renewal and expansion by Houghton Mifflin Co., which committed to a 10-year extension. The property has certainly outperformed the market in that regard, with Grubb & Ellis placing the vacancy rate for Interstate 495 North at an alarming 27.8 percent.
One tenant that Griffith Properties had been courting for 200 Ballardvale St. is Wyeth Pharmaceuticals, which has some term remaining for about 50,000 square feet at 187 Ballardvale St. The project also was pursuing the Mayo Clinic for another 50,000 square feet, but sources said last week that requirement has been put on hold until at least the end of the year. Even so, investors remain bullish on the Interstate 93 corridor north of Woburn, with Essex River principal John Fenton reporting last week that his company’s purchase of the R.J. Kelly buildings at 299 and 301 Ballardvale St. in Wilmington and 300 Ballardvale St. in abutting Andover is “moving forward.” Fenton would not discuss specifics of the deal, which is expected to close within the next few weeks, but sources put the sales price in the $30 million range.
As for 200 Ballardvale St., Griffith said he is encouraged by recent momentum among leasing prospects, with Richards Barry Joyce & Partners serving as exclusive listing agents. “We’re not lacking in people we’re showing it to,” said Griffith, whose firm is doing the renovation project in partnership with the Praedium Group, a New York investor. Along with landscaping upgrades now in the works, 200 Ballardvale St. is further benefiting from a new slip ramp onto Interstate 93 being built directly in front of the property, promising easier access to the park when completed.
Signs of Life
Other signs of life are prevalent, including the new building now under way on Concord Street in Wilmington being developed by Woburn-based Cummings. In breaking ground last week on the 26,000-square-foot office building at the Wilmington Business Park, Cummings Properties officials were hesitant to call the fast-track project speculative, having already leased a block of the space prior to its launch.
A dominating presence north of Boston, the Woburn-based developer has never shied from speculative construction, as evidenced by its 500 Cummings Center building erected sans tenant in Beverly and 92 Montvale Ave. in Stoneham, a 117,000-square-foot building acquired half-finished on the cusp of the mid-1990s real estate boom. Nonetheless, Cummings Properties Chairman Michael H. Pascavage said activity at the Wilmington Business Park has the firm confident of the prospects for 64 Concord St., the single-story building being carved out of a back lot behind the existing 50 and 60 Concord St. at the 7.5-acre park.
“We’re busier than we’ve been since 2000,” said Pascavage, whose company just completed a renovation program at 60 Concord St. following the consolidation by Dynamics Research Corp. into the 51,000-square-foot 50 Concord St. last autumn. Besides restoring the facade, a new main entry and central corridor allows 60 Concord St. to accommodate multiple tenants. The strategy quickly paid off in the leasing of 90 percent of the 32,000 square feet prior to completion of the renovations, highlighted by a 14,000-square-foot pact with Mitkem Technologies and an 8,000-square-foot commitment by Healthwyse LLC.
The robust response steeled Cummings to begin construction on 64 Concord St., explained Pascavage. After signing a small lease to a restaurant, the new building has just inked Rheumatology and Internal Medicine Assoc. to a deal for nearly 7,000 square feet, while other prospects are currently circling the opportunity
“It is very encouraging,” Pascavage said of the tenant reaction. Part of the reason offered is the park itself, which he noted is situated in a “highly visible location” that features quick access to Interstate 93 at the intersection of Concord Street and Fordham Road. The Wilmington Business Park is across the street from the Rivertech Park complex in North Reading that helped forge the office submarket there in the early 1990s, and is a short drive from Route 28 as well. Tenants are also pursuing modern space being made available in the new building, said Pascavage, whose firm is serving as general contractor and designed the structure in-house, engaging Michael Aveni as lead architect.
Despite the general optimism, industry observers say the Interstate 495 North region had a somewhat disappointing beginning to 2006, with Grubb & Ellis showing negative net absorption of nearly 100,000 square feet. “It was pretty much flat for the quarter,” concurred one broker active in the area, although the source also predicted that leasing velocity will pick up as the year progresses. Several major requirements are said to be in the market, among them IBM Corp., Motorola and Cedar Point Communications, a New Hampshire-based company supposedly seeking between 50,000 square feet and 100,000 square feet.
