When the exodus to the suburbs got underway more than a half-century ago, employers followed, and the office park was born. But today, as younger workers return to the city, and employers again follow the labor, these isolated campuses of low-slung buildings, parking lots, and company cafeterias face challenges, from new competitors to aging facilities to high vacancy rates.
As a result, owners and developers across Eastern Massachusetts are seeking to reinvent the suburban office park, taking a page from urban revitalization that transformed old mill and factory buildings into mixed-use developments of housing, retail, and office spaces. In communities such as Burlington and Marlborough, developers are adding restaurants, hotels, and other amenities, as well as housing, to compete with the â€œlive, work, playâ€ attraction of the city.
In Marlborough, for example, Atlantic Management Inc. of Framingham purchased the former Hewlett-Packard campus three years ago to launch a more than $200 million rehab of the 110-acre site, which dates back to the 1960s. The project is well underway, with Atlantic refurbishing the two office buildings, while AvalonBay Communities of Virginia, which purchased 26 acres at the site, builds 350 luxury apartments.
Atlantic Management also plans to develop a 153-room hotel and 50,000 square feet of retail and restaurant space that may one day include a farmers market. Already, this redevelopment of the Marlborough Hills office park has attracted a major corporate tenant, Quest Diagnostics of New Jersey, which plans to locate more than 1,000 lab workers there later this year.
â€œThe number-one challenge for many companies is how to attract talent,â€ said Joseph Zink, chief executive of Atlantic Management.â€œCompanies need to attract talent and this is one way to do it. I think weâ€™re going to see more of this in Massachusetts.
Suburban office parks across the nation are trying to respond to tenants insisting on more amenities, said David Begelfer, chief executive of NAIOP-Massachusetts, a real estate trade group. In Massachusetts, thereâ€™s no precise figure on how many office parks are undertaking renovations large and small, Begelfer said, but â€œitâ€™s dozens of them and theyâ€™re easily spending billions of dollars.â€
â€œThe market is demanding it,â€ he said.
Commercial real estate specialists say the trend in office park redevelopment is driven by two forces. First, property owners need to renovate aging, outdated buildings, some of which are a half-century old. Second, they must meet increasing competition from Boston, Cambridge, and other nearby urban communities.
Along Interstate 495, the vacancy rate for Class A offices is hovering at nearly 18 percent, compared with 11.5 percent in Boston and less than 6 percent in Cambridge. Commercial rents are depressed. Offices lease for only $20 per square foot in the region, less than half of what similar space fetches in Boston and Cambridge, according to Jones Lang LaSalle, a commercial real estate firm.
The site of the former headquarters of data storage giant EMC Corp. in Hopkinton is an extreme case of a struggling suburban property. The 160,000-square-foot building, just off I-495, has sat empty for 13 years, ever since EMC moved to newer offices elsewhere in town, said Steven Zieff, a partner with Hopkintonâ€™s Crossroads Redevelopment LLC.
Crossroads has an option to buy the 38-acre property, which also includes four one-story buildings, and hopes to redevelop the site into a mixed-use complex of housing, retail stores, restaurants, and office space.
â€œPeople are looking for something different,â€ said Zieff. â€œItâ€™s the entire â€˜live, work, playâ€™ environment that people want. They donâ€™t want to go to just an office park with a cafeteria and parking lots.â€
Along Route 128, the situation is not nearly as dire, with the office vacancy rate between Woburn and Needham running at 6.4 percent, below Bostonâ€™s. Rents near that stretch of the highway are rising as the economy continues to improve, averaging about $34 per square foot, about $20 less than office space in Boston and Cambridge.
But office park owners still feel pressure from intensifying competition with cities. In recent years, a number of suburban companies have moved to Boston or Cambridge, including ad firm Allen & Gerritsen, which moved to the Seaport District from Watertown. Biogen Idec soon will move from a Weston office campus to a new headquarters under construction in Kendall Square.
At the 13-building New England Executive Park in Burlington, the vacancy rate is 10 percent, with tenants that include tech firms BAE Systems, Charles River Systems, and Black Duck Software. Still, National Development, the parkâ€™s owner, is convinced it needs improvements to stay competitive.
Later this year the firm plans to start a major overhaul that includes demolishing an office building â€” all 13 buildings were built between 1969 and 1986 â€” and constructing 300,000 square feet of new development. The new additions will include a 170-room hotel, three full-service restaurants, and new retail and office space.
â€œWeâ€™re seeing this great rush to the city [by tenants],â€ said Ted Tye, managing partner at the Newton-based National Development. â€œWhat thatâ€™s doing is forcing suburban properties to stay on their toes. And weâ€™re responding to that.â€
National Development, however, wonâ€™t add housing to its New England Executive Park mix. Tye said heâ€™s not convinced that housing within office parks is a smart idea. Some towns might end up getting financially hurt because commercial and industrial properties are usually taxed at higher levels than residential properties, he said.
He added that itâ€™s also hard to duplicate urban settings within suburban parks if theyâ€™re not near public transit and donâ€™t have easy pedestrian access to offices. â€œThis is a source of some disagreement within the industry,â€ he said of housingâ€™s role in office park redevelopment.
In contrast, Nordblom Co., owner of Northwest Park in Burlington, is a firm believer in â€œlive, work, play.â€ Three years ago, it launched a massive $500 million project to redevelop about half the 285-acre office park to include 600,000 square feet of retail space, 300 new apartments, a 225-room hotel, and 3.5 million square feet of new or refurbished offices.
Todd Fremont-Smith, senior vice president of Nordblom, said the redevelopment, which could take another 10 years to complete, has already attracted new office tenants, a steakhouse restaurant called The Bancroft, and a new Wegmanâ€™s supermarket, which opens in October.
â€œBy mixing the uses, you have a more dynamic environment â€” and itâ€™s more rentable,â€ Fremont-Smith said. â€œPeople are seeking urban-like amenities where they work. I think weâ€™re going to see more of this at both office and industrial parks. People want it.â€
Below is a look at some proposed projects.
Elmwood Park, Hopkinton
(possibly to be rebranded to Crossroads)
Developer Crossroads Redevelopment LLC
Former and current use Former 160,000-square-foot headquarters of EMC, four one-story â€œflex spaceâ€ buildings, and parking lots.
Development plan Construct 375 apartment units and a 150-room hotel; possibly renovate old EMC building or completely rebuild it; and build new access roadway to site.
Status Under zoning review by town of Hopkinton.
Marlborough Hills, Marlborough
Developer Atlantic Management Inc.
Former use 750,000 square feet of office and R&D space in two buildings, previously used by Hewlett-Packard and vacated in 2011.
Development plan Remodel the two buildings and add 350 apartment units, a 153-room hotel and 50,000 square feet of retail and restaurant space.
Status One former HP building has already been renovated and leased to Quest Diagnostics; construction is underway on residential units; construction set to start this fall on hotel; no timetable yet for renovation of second HP building.
Wells Avenue Park, Newton
Developer Cabot, Cabot & Forbes
Former use Parcel at 135 Wells Ave., now a 62,000- square-foot Boston Sports Club facility
Development plan Tear down building and replace it with 334 apartment units; 6,000 square feet of co-working space for small companies and a cafÃ©.
Status Still awaiting city permits.