Report: I-495 West Class A office availability lowest since '07
The amount of available Class A office space —the kind sought by large companies with big rent budgets — is dwindling in the Route 495 West market. But there are still large blocks of vacant space, and the market may have a ways to go before reaching optimal strength.
A recent report by Boston commercial real estate firm Transwestern|RBJ found that Class A office availability totaled just a hair above 20 percent in the first quarter, which closed March 31. According to Transwestern, that’s the lowest rate of availability in the I-495 West submarket since 2007.
“The market is definitely heating up and deals are getting done,” said Marci Alvarado, a commercial real estate broker with Parsons Commercial Group in Framingham.
Alvarado does business in the 495 West submarket, which, according to Transwestern, includes the Boroughs’ towns, along with Hopkinton, Natick, Framingham, Sudbury, Wayland, Milford, Hudson and Bolton.
Alvarado said shrinking availability has a lot to do with the absorption of vacant space in Marlborough at the former Fidelity Investments and Hewlett-Packard sites, Alvarado said. Together, GE Health Care Life Sciences and Quest Diagnostics have eaten up more than half of that vacant space at the former HP campus in the last year alone.
But there’s still a lot of room for improvement. Alvarado has been in the business for 20 years, and she said an availability rate of around 10 percent in a given market is “pretty darn good,” while the current rate of about 20 percent simply shows the market is headed in the right direction.
“Even though several larger users absorbed some of the bigger blocks of space it doesn’t mean that there aren’t other large pieces of space that still need to be leased,”Alvarado said.
This can take time. Alvarado said any commercial office space of at least 20,000 square feet is a “sizeable availability” that can take time to fill. And there are many offices buildings with at least that much space available for lease in the area.
In Westborough, for example, nearly 130,000 square feet of space is available at 118 Flanders Rd., which formerly housed TJX Cos. offices that were relocated to the former Fidelity Investments campus in Marlborough. There is also about 40,000 square feet of space available at 46 Lizotte Dr. in Marlborough, which is owned by St. Mary’s Credit Union. St. Mary’s headquarters is on the third floor of that building.
Class A availability boosting Class B quality?
As brokers work to lease these and other vacant locations (Alvarado said the owner of the Flanders Road property is reportedly negotiating a lease with a prospective tenant), the still-generous availability of Class A space has had an interesting effect on the wider office market. Owners of Class B office buildings, which generally don’t offer the amenities and prime locations that Class A spaces do, are sprucing up their properties to attract tenants who might otherwise opt for a Class A lease.
“I think that’s partly why they have to do that … because there are plenty of options in Class A buildings that offer their tenants amenities like food service, conference facilities or a gym area,” Alvarado said. “There’s got to be a reason, besides the price, which attracts the tenant.”
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