The city of Marlborough has pumped out some headline-grabbing commercial real estate deals this year as companies have signed agreements to absorb nearly 1 million square feet of vacant commercial real estate within the city limits.
First, the TJX Cos., parent to TJ Maxx and other discount retailers, announced it would buy and occupy about 700,000 square feet of offices formerly occupied by Fidelity at 300 and 400 Puritan Way.
Then, Boston Scientific Corp. announced it would consolidate its headquarters at space it already occupies in Marlborough. But since that will be new construction it will not cause space absorption in the cityâ€™s commercial real estate market.
More recently, Quest Diagnostics signed a 15-year deal to lease 200,000 square of space left vacant by Hewlett-Packard (HP) at 200 Forest St.
But there are plenty of large blocks of space still available in Marlborough, where total commercial real estate was 29.5 percent vacant as of the third quarter, according to information from Jones Lang LaSalle. Thatâ€™s 1.11 million square feet sitting vacant of a total 3.78 million square feet of supply.
Just look at 251 Locke Drive, where 162,000 square feet is sitting vacant, according to information from Jones Lang LaSalle. At 397 Williams St., 130,000 square feet of space is available. At 600 Nickerson Road, 101,000 square feet has been vacant for five years.
Then thereâ€™s 200 Donald Lynch Blvd., where 100,000 square feet has been empty for about a dozen years, and 47 Lizotte Drive, which has a cool 60,000 square feet of space thatâ€™s been tenantless about three years, according to industry sources.
Top that all off with the roughly 540,000 square feet of space still vacant in buildings at the HP site, and you have a rather soft market that is rewarding large users. Atlantic Management, the Framingham-based owner of the HP site, will more likely than not hold out for a large user, rather than a single-floor user that would occupy just one of the large floor plates in the park, industry sources told Banker & Tradesman.
Overlay District Approved
That seems to be just fine for Joseph Zink and the rest of Atlantic. The company just got approvals for an overlay district at the former HP campus, now called Forest Park, which streamlines the permitting process for redevelopment of the park into a mixed-use destination.
The firm envisions recreating about 750,000 to 1 million square feet of office and lab space on the campus, and building 350 residential units along with a 125- to 150-room hotel, and 50,000 to 75,000 square feet of retail space, including restaurants, dry cleaners, banks and cafes.
â€œThat [Mass Pike] exit has no retail at all,â€ said Zink, Atlanticâ€™s president. â€œNow weâ€™ll have a well thought-out, master planned campus.
â€œThereâ€™s 3 million square feet of office space at that off-ramp,â€ Zink continued. â€œThe areaâ€™s residential supply is 97 percent occupied and there hasnâ€™t been any new construction in years.â€
Zink noted that the exit has no hotel either, and said the Forest Park hotel would be a mid-range hotel.
He said his company is in talks with other tenants looking to fill much of the remaining space at the campus. He said he expects â€œsome activityâ€ in the next 90 days, but would not elaborate. He did say, however, that many of the prospective tenants are in the biotech and high-tech industries with R&D operations.
Zink said Atlantic will spend about $200 million for the entire campus renovation. Luckily, almost all necessary infrastructure is already in place, he added.
But that infrastructure will not likely support any of the average MetroWest tenants seeking space in the market. The average-sized tenant in MetroWest market is 7,000 to 10,000 square feet, according to information from Jones Lang LaSalle, and there are many smaller Class B buildings to help establish those startups.
Framingham-based Bose has been out in the market sniffing around for potentially 20,000 to 100,000 square feet of room for growth. But the company has another campus in Stow, so itâ€™s possible any growth could be accommodated there, another industry executive told Banker & Tradesman.