Large Corporate Real Estate Moves Spur Optimism in I-495 West

Photo/Courtesy CBRE-NE Metro West Team (from left to right): Chris Tosti, Sam Crossan, Bob McGuire, Alison Powers and Rob Walles.

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By Chris Tosti, Rob Walles, Bob Mcguire, Alison Powers, And Sam Crossan

For the last several years, anyone discussing the regression of the I-495 office market had to look no further than Marlborough as the primary example of the region's fall from grace. Formerly the home of corporate stalwarts Data General, Hewlett-Packard, 3Com and Fidelity Investments, the past 10 years has seen the formerly robust office market evolve from the new face of Massachusetts' burgeoning technological economy to a region that bore the brunt of the recession. With large corporate tenants fleeing the area due to M&A activity, corporate consolidation and bankruptcies, vacancy rates soared and sentiment in the real estate industry soured on the region's formerly bright future.

The I-495 West market has been challenged recently because of its lack of proximity to urban areas. Recruitment of the younger knowledge worker, with a desire for a "live, work, play" environment, has increasingly drove office requirements into Cambridge, the Seaport, the Financial District and the thriving market of Burlington.

The Large Corporate User Returns

Recent trends aside, the last several quarters have seen several large corporate commitments to Marlborough spurring a renewed sense of optimism that the Metro West market is on the rebound. In March, the TJX Companies closed on the former 716,000-square-foot Fidelity Campus, capping off a reorganization of their local real estate portfolio, which included the purchase of their 800,000-square-foot headquarters in Framingham. In early November, Boston Scientific announced a pending sale of their 500,000-square-foot Natick headquarters to The MathWorks, resulting in a move to an existing location in Marlborough where they will construct a 225,000-square-foot expansion of their existing facility.

Positive sentiment continues to exude from the market at Forest Park (200 Forest Street, Marlborough), the former Hewlett-Packard campus. The 100-plus-acre site has garnered strong activity from large users in 2012, furthering the momentum for the first phase of redevelopment, and is I-495's answer to the "live, work, play" environment.

The return of large corporate users to Marlborough will not directly impact the smaller space users within the area, however it does speak to a renewed sense of optimism in the market and a testament that the I-495 belt has once again returned as a desirable and cost-effective home for corporate headquarters. With a difference in office rents of $10 to $20 per square foot compared with similar product in the 128-West market, the I-495 West market appears poised to continue its momentum.

CBRE/New England is a commercial real estate services firm with offices in Boston.

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