Series of lease deals helps fill empty office buildings
A trio of well-known companies is helping to fill Marlborough’s empty office buildings and reduce the availability rate that peaked at more than 47 percent a year ago following the departure of Fidelity Investments and Hewlett-Packard.
Quest Diagnostics, a provider of health care products and services, is among the companies to recently sign a deal to take a large block of space in Marlborough. Boston Scientific Corp. last month said that it plans to expand its presence in Marlborough and move its headquarters there from Natick. And Framingham-based TJX Cos. — which operates the T.J. Maxx, Marshalls, and HomeGoods chains — was the first major firm to give the city a boost when it agreed to pay $72 million for a pair of Fidelity buildings last spring.
“After all the bad news out of Marlborough over the last few years with the departure of HP and Fidelity, the city finally has some momentum,” said Garry Holmes, president of R.W. Holmes, a Wayland-based commercial real estate brokerage firm.
Quest is moving to 200,000 square feet of space at a former HP property at 200 Forest St. TJX purchased a pair of office buildings at 300 and 400 Puritan Way known as Corporate Crossing at 495, a 716,000-square-foot office campus, from Fidelity for $62.5 million. The properties became available when Fidelity cut thousands of jobs in Massachusetts, shuttered its Marlborough operations and moved most of those 1,100 employees out of state last year.
Boston Scientific said it will sell its Natick facility on Route 9. The medical device company owns three buildings in Marlborough and plans to build a fourth as its new corporate headquarters next year.
Third quarter office data from Jones Lang LaSalle shows the flurry of activity in Marlborough has improved the office market. The availability rate for Class A properties fell to 32.2 percent from July through September, down from 37.7 percent for the same period last year. Still, it’s not all rosy. Despite the rise in occupancy, average asking rents slipped to $18.25 per square foot in Class A buildings, down from $19.66 per square foot one year ago.
Still, Holmes is bullish on Marlborough. “When big companies come to a city, one of the benefits is businesses, like vendors or suppliers, will give Marlborough a look and you will notice the occupancy rate rise as 5,000- to 10,000-square foot tenants fill some of those empty offices,” he said.
Quest, which has lab space in Worcester and Cambridge, plans to consolidate its labs into the Marlborough campus and spend $64 million to renovate 200,000 square feet.
Marlborough has taken an aggressive approach with generous tax-increment financing deals to lure employers. TIF deals offer tax breaks on new construction in exchange for a promise to create jobs.
Quest’s 15-year TIF is valued at an estimated $9.4 million. TJX’s deal will save the company $11 million.
Tim Cummings, head of the Marlborough Economic Development Corp., said TIFs were not the deciding factor for the firms to choose Marlborough. “TIFs don’t play a strong role in a company’s decision to choose to locate here,” Cummings said. “It’s an additional resource that a company can use. I’d say location and human capital are more important drivers for a site selection.”
Real Estate Editor- Boston Business Journal