Landlords See Their Investments Pay Off Big in Route 495 Office Market

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Article courtesy of Cresa Boston

The first two quarters of 2016 were marked by several large and significant lease transactions in the Route 495 North submarket. These include Entegris (175K SF in Billerica), Straumann USA (170K SF in Andover), and Cynosure (158K SF in Westford) — all of which were renewals of existing leases. This isn’t terribly surprising, given the complexity of having to move an office of these sizes. It’s more common for larger tenants (50K SF+) to renew instead of moving.

This fact makes the other two big transactions in the Route 495 North area that much more intriguing. This time last year, we told you about a big “roll of the dice” by the new ownership teams of two of the largest parks in the Route 495 North region. The first was Anchor Line Partners’ acquisition of nearly 1.3M SF of office space at the Cross Point Towers in Lowell. The other was a one million SF joint-venture purchase of Brickstone Square in Andover by KS Partners and Oaktree Capital. Purchasing such large assets is certainly a gamble. However, both of these landlords doubled-down by investing millions in renovations, capital projects and bringing new amenities to the parks in hopes of attracting an anchor tenant. Both have paid dividends.

In the second quarter, Kronos signed the state’s largest suburban lease so far in 2016, agreeing to consolidate four locations in Chelmsford into a 435,000 SF space at Cross Point. This important lease alone helped the vacancy rate at Cross Point drop from 42% to 8%. Not quite as massive, but still critical to the owners, was
Enel North America’s move to 65,000 SF at 100 Brickstone Square from another location in Andover, making them the largest tenant in the park. In addition, the second largest tenant in the complex — Broadcom
— renewed their lease and increased their footprint from 18K SF to 60K SF just shortly after the owners acquired the building and announced the renovation plans.

Would these owners still have had a chance at landing these deals had they not been willing to pour investment capital into their new assets? Perhaps. However, they decided to take a chance and put their chips in the middle... and won big.

Read the full market report.

Cresa is the world’s largest tenant-only commercial real estate firm. In representing tenants exclusively — no landlords, no developers — we provide unbiased, conflict-free advice. Our integrated services cover every aspect of a real estate transaction from site selection and financing to project management and relocation services. We offer our clients customized solutions with over 60 offices covering 75 markets worldwide. For more information, visit www.cresa.com.