Minnesota-based UnitedHealth Group reportedly has leased nearly 75,000 square feet at the Bay Colony Corporate Center. The deal is one of two major office leases recently signed in Waltham.
Two major office leases are helping kick 2006 off in a big way in Waltham. Raytheon Inc. is expected to commit to more than 100,000 square feet at 235 Wyman St. in the Hobbs Brook Office Park and UnitedHealth Group is headed for the Bay Colony Corporate Center, according to industry sources.
“The deal is signed,” one suburban broker insisted last week of the latter agreement, with estimates that UnitedHealth Group will take close to 75,000 square feet at 950 Winter St. The Minnesota-based firm currently occupies a smaller block of space at Bay Colony, and will be relocating another operation from 275 Grove St. in Newton as well. Bay Colony is owned by Beacon Capital Partners, which acquired the 1.1 million-square-foot complex last year for $272 million.
Cushman & Wakefield Executive Director Mark Roth, who represents Bay Colony as exclusive leasing agent, did not respond to inquiries regarding the lease by Banker & Tradesman’s press deadline, while officials at Beacon Capital Partners were also unavailable to discuss the status of negotiations. Information was similarly lacking from the tenant’s side, with broker John J. Boyle III of Trammell Crow declining comment when reached late last week.
Boyle and colleague Eric Solen have been representing UnitedHealth Group in its space search throughout the Route 128 Central office market, during which the company reportedly eyed several competing properties before settling on Bay Colony. One source familiar with the discussions there pegged the rental rate at about $30 per square foot – with a tenant fit-out allowance of $50 per square foot – and maintained that UnitedHealth Group has agreed to a 10-year deal at the park, which overlooks Route 128.
The Raytheon requirement primarily involves an operation that has been occupied on Seyon Street near downtown Waltham, a property which the defense giant owned for decades before selling it in the late 1990s to a developer intent on converting the sprawling property into a multi-tenanted technology complex. That effort ultimately resulted in a foreclosure of the asset when the technology sector crashed, and the remnants of Raytheon’s group has subsequently been looking for a new home in the surrounding area for the past year.
Sources could not say whether the Raytheon agreement has been completed, but one observer tracking the negotiations called that step “imminent,” claiming the lease is likely to be in place this week if it has not already been consummated. “That is where they are going,” the source insisted of 235 Wyman St.
Tenant broker Lenny C. Owens Jr. of McCall & Almy did not return phone calls by press deadline. Wyman Street Advisors President Charles E. Batchelder Jr., who represents the landlord, declined to discuss the status of any deal.
Key Players
As evidenced by the firms involved in the latest lease talks, defense and health care companies have been key players in helping revive the suburban Boston office market, a sector that suffered mightily when the recession of 2001 took hold in Massachusetts. After relocating its headquarters from its longtime home in Lexington to Waltham in 2003, Raytheon has since expanded throughout suburban Boston, taking major blocks of space in such communities as Billerica and Woburn.
UnitedHealth Group is among the high-flying performers expanding on the medical front, a field which has enjoyed substantial growth locally in recent years. In one of the larger leases signed in 2005, for example, Fresenius Medical AG committed to more than 200,000 square feet at 920 Winter St. in Waltham, and MassPRO, a health care review organization, leased 51,000 square feet at nearby 245 Winter St. Those organizations join established medical and life sciences companies already calling Waltham home, firms such as Praecius Pharmaceuticals and Astra Zeneca.
As the focal point of the Route 128 Central office market, Waltham has enjoyed a particularly solid rebound during the past 18 months after being among the Greater Boston communities most seriously hit by the technology downturn. According to GVA Thompson Doyle Hennessey & Stevens, the average asking rate for Class A space in Waltham has now recovered enough that it is averaging above $30 per square foot at $30.81. The overall suburban market averages $20.83 per square foot for Class A space, GVA TDH&S reported in its 2005 market overview, which the real estate services firm issued last week.
The average asking rate for all office space in the Route 128 Central office market is now running at $20.72 per square foot, GVA TDH&S indicated. Totaling 10.8 million square feet of space, the submarket registered 1.4 million square feet of positive net absorption during 2005. That hyperactive pace dropped the vacancy rate for Route 128 Central to 17 percent, a mark that had approached 30 percent during the region’s darkest economic days in 2003. The recovery has been so pronounced that several local developers are now looking to take the wraps off new office construction in Waltham and nearby communities such as Newton and Weston, projects that were mothballed during the downturn.
