The Suburban – Route 495/Mass Pike area contains 11 towns including Framingham, Holliston, Hopkinton, Hudson, Marlborough, Natick, Northborough, Shrewsbury, Southborough, Sudbury and Westborough.

Contacts – William Bailey, Principal, Philip DeSimone, Vice President, or Kristin O’Shea, Associate Brokerage Group

Note:  Year End 2003 Market Overview – If you would like a year-end 2003 market overview and our outlook for 2004, please click on one of the links above to set up a meeting.

495/Mass Pike Office Market

2003 Year End Review – The total office inventory is 12.3 million square feet, with only one speculative building delivered, totaling 70,831 square feet. Availability was relatively steady in 2003, particularly from 3rd to 4th quarter, only inching up to 32.0%. Slight negative absorption resulted in part, from several tenants renewing, and consolidating into smaller spaces. Overall, occupancy seems to be stabilizing, a trend that we expect will continue for the next several quarters based on current demand and the slowdown in space coming back on the market. Sublease still accounts for 35% of the available space in the market and competition among sub-landlords and landlords will continue, especially with those spaces that do not have considerable term left.

Asking rents continued to trend lower, falling by an additional 1.4% to $18.65 per square foot Gross during the 4th quarter. Overall, rents have dropped approximately 14.4% since the beginning of the year. This was due to sub landlords and landlords getting closer to the “strike price” and the need for cash flows rather than holding out for high face rates. Assuming some of the large availabilities are absorbed by major requirements in the market, rents should begin stabilize as availability decreases in 2004.

Spaulding & Slye Colliers is currently tracking 43 requirements targeting the 495/Mass Pike office market, totaling 1,868,946 square feet. With 3.9 million square feet of space available, supply outweighs demand by two-to-one, a better ratio than most other submarkets. On a positive note looking ahead, several large employers still have significant new requirements in the market, such as Boston Scientific, PNC Bank and TJX. These major 495/Mass Pike employers will make a significant impact on availability in 2004, creating an environment for rent stabilization.

Framingham –1455 Concord Street, a 34,080 square foot flex building sold for $3.5 million or approximately $102 per square foot. This building was constructed in 1977 and was fully leased.  

Marlborough – The Maggiore Companies sold 225 Cedar Hill Street for $10.2 million, approximately $94 per square foot to a local investor.  225 Cedar Hill Street is a 109,590 square foot building that was built in 2001.

Westborough – The Summers Group purchased 12 Union Street from Tyrolit North America for $2.2 million, or approximately $4 per square foot. The property is comprised of two buildings, including a 500,000-square-foot manufacturing facility and a 45,000-square-foot R&D building. The Summers Group plans to redevelop the property into a mixed-use complex, including residential, retail, office and restaurant spaces.

Marlborough – Cytyc Corporation recently signed a large transaction over 200,000 square feet at the former 3Com Corporation Campus at 3 Network Drive.  This space has been on the market for over two years and shows a positive sign for the metrowest market’s availability rate.       

Metrowest – Several requirements, including TJX, Boston Scientific and PNC Bank, have been in the market for a substantial period of time and did not transact by year-end.  We believe that during 2004, several of the larger requirements will transact and along with several new start-ups, we will see positive absorption and rent stabilization.