Reason For Hope In Marlborough
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Marlborough Mayor Arthur Vigeant said TJX's announcement that it will buy the Fidelity Investments campus is a good start to the city's economic recovery.
TJX’s current Framingham headquarters. Exactly what role the building will play after the company moves operations to Marlborough is yet to be seen.
From a commercial activity standpoint, Marlborough has had a rough go of it recently.
Some recent history: The massive, former Hewlett-Packard campus on Forest Street has sat empty for many months, long awaiting a bite from a builder or investor. And in March 2011, Boston-based Fidelity Investments announced it would vacate its adjacent Puritan Way facility by the end of 2012, and relocate or lay off 1,100 employees in the process.
A collective uncertainty was felt throughout the city – the ramifications were that Marlborough would soon be left with more than a million square feet of unused commercial space in a prime area just off 495.
But then things very rapidly turned around: A commercial real estate investor bought the former HP site last fall – it's now seeking tenants to lease the space – and in March, TJX announced plans to purchase the Fidelity property.
Officials are pleased with the forward movement – but remain pragmatic as to planning.
“It's a light at the end of the tunnel from a recession standpoint,” said Marlborough Mayor Arthur Vigeant, “but we still have a ways to go.”
Other Priorities Remain
To start, the former HP site, comprising of 750,000 square feet of office and manufacturing space set on 109 acres, has yet to be filled. Framingham-based Atlantic Management purchased the property from HP on Aug. 31 for $8.7 million, and, according to Vigeant, the city is now working with the company to seek out the “appropriate tenant.”
There has been a good amount of interest so far, he said – some potential buyers are looking to utilize and retrofit an existing space, while others want to start over by razing buildings and erecting new ones better suited to their purposes.
“I'd love to have it happen tomorrow,” said Vigeant. But, “we don't have anyone right now.”
Joseph Zink, president and CEO of Atlantic Management, did not return calls seeking comment.
The TJX purchase, meanwhile, remains in the early stages, and details remain sparse.
In early March, the company signed a purchase and sale agreement for the property, located at 300 and 400 Puritan Way. Although TJX didn't release the purchase price, The Boston Globe reported that it was around $72 million.
According to a written statement provided by Sherry Lang, senior vice president of global communications for TJX, the space will house certain home office operations, and will help the company “accommodate its future growth plans.” TJX plans to renovate the property, according to the statement, and doesn't anticipate it being up-and-running before late 2013.
The statement also notes that TJX is “concurrently working hard” to maintain its home office on 770 Cochituate Road in Framingham, “which, together with Marlborough, would provide TJX with two major campuses operating in close proximity to one another.”
Mayor Looks To TIF To Seal Deal
Lack of public details aside, Vigeant sees the deal as a “huge success story” for the city. The property already brings in $1.5 million in tax revenue, he said, and a new infusion of roughly 1,600 employees will provide additional income for local gas stations, stores, and hotels.
The city is hammering out the details of a 20-year Tax Increment Financing (TIF) agreement with the company.
“We're looking forward to a long relationship with them,” said Vigeant.
And the region, as well, said Maureen Dunne, a regional economist and professor at Framingham State College.
“They're a major employer that's made a major commitment to staying in the region,” said Dunne, who is also vice chair of the Framingham Economic Development and Industrial Corporation (EDIC). “It's good news for the region, especially if they plan to continue using both sites.”
But if they don't? Dunne said she has concerns about a TIF being used to potentially lure TJX out of Framingham. If that happens, you “risk cannibalizing the tax base,” she said, and in terms of fostering growth in the region, it would be “a wash.”
But if the company does end up using both sites, “it's a win-win,” she said.
Other Sites See Movement
Beyond these two biggest commercial accomplishments, there's been some other movement in the city, too. Belfor, a global disaster recovery and property restoration firm, recently signed a lease for 20,000 square feet on Bartlett Street.
And in November, Houston-based Hines Global REIT purchased The Campus at Marlborough for $103 million. The site, located not far from the HP and Fidelity campuses, is fully leased at this point, according to officials, but Hines is marketing another 650,000 square feet of undeveloped space on-campus as build-to-suit.
Vigeant noted that others are contemplating moving to the city, as well, although he was mum to say more about any definite details.
“We've been real happy with the activity,” he said. “It's a great time to be down here.”
But why is this all happening now?
Owners of commercial real estate are clearly interested in negotiating, said Dunne; interest rates are good; and the amount of vacant properties available makes it a buyer's market. Meanwhile, MetroWest is less expensive than areas closer to Boston, she said, boasts good access to major highways, and has a large number of highly-skilled workers seeking jobs.
Overall, “we're very encouraged,” said Susanne Morreale Leeber, President and CEO of the Marlborough Regional Chamber of Commerce. “It was disconcerting when we heard that all those companies were moving.”
But as with many other facets of the economy, the commercial market is cyclical, notes Morreale Leeber.
“We have been up, we have been down, and now people are finally seeing things turning around and going up again,” she said.
Still, not as much as Dunne, the regional economist, would like to see.
She noted that, in 2004, there were 10,530 commercial establishments in the region, while in 2010 that had dropped to 10,300.
“It's been flat basically,” she said. “It means we're not growing establishments or places of work.”
Marlborough, for its part, has had the highest job losses in the area, based on research done by the MetroWest Economic Research Center at Framingham State University, dropping 6 percent – 1,800 jobs – between 2008 and 2009, with no net gain in 2010. Employment peaked in 2008 with 30,658 jobs, and was down to 28,834 in 2010, according to the Executive Office of Labor and Workforce Development. Complete statistics are not yet available for 2011, but as of September 2011, the figure was still in the mid-28,000 range.
Vestas Disappointment
While the movement on the HP and Fidelity sites has been positive, there have been some setbacks, as well. Vestas, an international wind turbine manufacturer, backed out of its plans to open a $16 million, 27,000-square-foot test and verification facility on Crowley Drive, according to Vestas spokesman Andrew Longeteig. The endeavor was expected to add more than 65 jobs. A city-approved TIF, worth $1.6 million and set to go into effect in July, will be dissolved.
Longeteig declined to comment further.
“We're disappointed to see them pull the plug on that project,” said Vigeant.
However, he noted that the company will lease floor space in an adjacent building, creating 20 new jobs.
And ultimately, the fall-out will foster a future opportunity.
“It's a beautiful site down there that I'm sure someone else will be building on in the near future,” he said.
Overall, economists and officials have predicted that, as a result of the recent commercial activity, the city and region's vacancy rate will improve. As of fourth quarter 2011, the MetroWest office vacancy rate was at 16 percent, according to Boston-based Cushman and Wakefield, while the 495 west office vacancy rate was 25 percent.
Morreale Leeber also noted that recent movement will only spur further growth.
“Once a company sees another company coming in, they also become very interested,” she said. “It's the domino effect.”
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