MetroWest495 Biz

MetroWest495 Biz | February 2014 11 family business Honoring the families that make up the backbone of this economy Nomination Deadline: April 11, 2014 Submit online at www.wbjournal.com/familybusinessawards 40 under forty Honoring the best and brightest business leaders under 40 in Central Massachusetts Nomination Deadline: May 2, 2014 Submit online at: www.wbjournal.com/40underforty Looking to recognize that outstanding staff member, client, or colleague? Make sure that they get the recognition that they deserve by nominating them for one of the following Worcester Business Journal special awards! Call for NomiNatioNs! In Print. Online. In Person. outstanding Women in business Honoring female business leaders in Central Massachusetts Nomination Deadline: August 8, 2014 Submit online at: www.wbjournal.com/womeninbusiness all systems go for metroWest leasing Life science friendliness, shrinking Boston vacancies bode well for 495/Mass Pike area S ince the national economic recovery began to take shape nearly four years ago, the "stop-go" regional and national economic growth pat- terns have made it difficult for the effects of Boston's resurgent economy to fan out evenly across Eastern Massachusetts. As a result, while Boston's inner suburbs along Route 128 began to see signs of earnest recovery starting in early 2011, the 495/Mass Pike submarket hit its low point in the middle of 2012. The market has once again, however, started to pick up steam. Last year was a time of moderate recovery for MetroWest commercial real estate. As of the fourth quarter, the 495/Mass Pike submarket's availability rate had fallen 3.9 percentage points from its all-time high of 29.1 percent in the third quarter of 2012, to 26.0 percent. Unfortunately, the submarket's vacancy rate increased 0.7 percentage points over the same period, to 19.5 percent, as TJX's space at 500 Old Connecticut Path went from being future available to directly vacant. Asking rents did begin to reflect MetroWest's brightening economic outlook, posting a 3.0-percent year-over-year rise. Also, 2013 saw the 495/Mass Pike submarket emerge as a strong alternative for life sciences compa- nies in the Greater Boston area. Several municipali- ties have proactively sought life-science companies to both relocate and develop properties in their cities. Marlborough, in particular, has offered flexible tax incentives known as TIF agreements to life-science companies over the past few years. It was recently labeled a "Platinum BioReady Community" by the Massachusetts Biotechnology Council. Life science leads the way As a result of these initiatives from Marlborough and other surrounding communities, the submarket saw over 200,000 square feet of lease transactions from life science tenants during 2013. These tenants included HeartWare International, which signed a 58,000-square-foot lease at 500 Old Connecticut Path in Framingham; and Oxford Immunotech, which leased 17,000 square feet at 700 Nickerson Road in Marlborough. These transactions came on the heels of Quest Di- agnostic's 2012 decision to lease 200,000 square feet at 200 Forest Street in Marlborough. All told, they contributed significantly to the submarket's continu- ing recovery by filling a void left by traditional office users such as legal and financial services companies, which have significantly scaled back their footprint in MetroWest over the past five years. In the other side of the coin, 2013 was also an ac- tive year for sales in MetroWest, including RREEF's sale of 111 Speen Street to Marcus Partners for $14.5 million, or $126 per square foot. In addition, Boston Scientific sold its 510,000-square-foot Natick headquarters to software company MathWorks for $55 million, or $107 per square foot. Farther out, in Southborough, TA Associates sold 120 Turnpike Road, an 81,000-square-foot Class B building, for $9.2 million, $112 per square foot. Looking ahead, we expect 2014 to be year of sturdy improvement for the 495/Mass Pike submarket. The rapidly improving market conditions in Boston's inner suburbs along Route 128 have now pushed vacancy levels in cities like Waltham and Needham to their lowest points in over five years and sent Class A rents surging at rate of nearly four percent a year. Additionally, large blocks of available space have become increasingly scarce in the inner suburbs, leaving few options available for larger users seeking more than 50,000 square feet of space. New and expanding tenants in Greater Boston will have a strong incentive to explore MetroWest for both space accommodations and competitive pricing. n ReaL angLe BY Phil DeSimone Special to MetroWest495 Biz This report was authored by Phil DeSimone, managing director at Boston's Jones Lang LaSalle, a professional services and investment management company specializing in real estate.

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