The Real Reporter - July 30, 2009

Big Strides at TradeCenter 128
Thanks to Small Firms, Lease-up Plan Makes
The Real Reporter

WOBURN—Nearly everything about TradeCenter 128 is big, from its three-story arched gateway, grand lobbies and a five-level garage to the 600,000-sf park’s frontage along namesake highway Route 128. Ironically, however, landlord Cummings Properties has leaned on the smaller set to populate the fourbuilding complex, which has now surpassed the 60 percent occupancy milestone.

“We are still seeing a steady stream of small businesses out looking for space, and we think (TradeCenter 128) serves that tenant well,” says Cummings President Dennis A. Clarke. While capturing larger requirements was anticipated in pursuing its ambitious spec project—and leasing leader Eric S. Anderson stresses deals can still be done to 150,000 sf—TradeCenter 128 has lured dozens of firms seeking between 2,000 and 15,000 sf. The tenant constituency is close to 60, Anderson relays, quickly turning the sprawling complex into a beehive of activity.

“There is a lot of energy there,” Anderson reports, adding, “that definitely helps when you are showing space” to new prospects. Recent arrivals include a boutique insurance brokerage, Tudor Risk Services; software purveyors Kova and Simpad; and KBW Financial Staffing and Recruiting. Legal services are well-represented, such as New Hampshire law firm McLane, Graf, Raulerson & Middleton that chose TradeCenter 128 to establish its first Massachusetts office.

The burgeoning medical sector has also boosted leasing, evidenced by fresh deals with HealthcareSource (10,000 sf); Connective Orthopedics (5,000 sf); and Winchester Hospital (3,500 sf). Orsyp Software is preparing to move into 3,000 sf, while Northwestern Mutual has secured 8,000 sf.

Clarke says he is not surprised by the size aspect of TradeCenter 128’s leasing roster, which mimics the footprint of companies seeking space. Jones Lang LaSalle reports that only 11 of 128 tenants looking for 5.2 million sf collectively in suburban Boston are in the six-figure realm, and many of the big plums are candidates for renewing. As a result, relocations or new deals over 50,000 sf have been scant in 2009, and market observers say the nearterm pipeline is also measured.

The demographics suit Cummings just fine, says Clarke, noting that the firm’s suburban north portfolio is stocked full of tenants occupying 1,000 to 5,000 sf, even in vast developments such as Cummings Center in Beverly and Cummings Park, the complex on Washington Street in Woburn where the company is headquartered. “We’re encouraged by that,” Clarke says of the climate, especially given that the new property has plenty of room for successful startups to expand. “Entrepreneurial firms have always been the re-builders of the Massachusetts economy, and we are fortunate to have watched many of them grow at our properties over the years,” he says. “We look forward to seeing that” pattern repeated at TradeCenter 128.

Cummings VP John R. Wiseman explains TradeCenter 128 was designed to address changing market conditions. “It’s a very flexible building,” he reports, while other features that help the multi-tenanted approach work include covered, samelevel parking to all five floors, plus a variety of food service and amenities to accommodate on-the-go workstyles. As detailed in last week’s Real Reporter, Cummings is also opening an upscale restaurant at TradeCenter 128 that will serve park tenants in the day and nearby communities in the evening.

The Beacon Grille is slated to open on January 15th. In the meantime, Anderson says the pace of prospects considering TradeCenter 128 has increased in recent weeks, overcoming the normally slow summer season. “We’re pleased,” he says. “Things died off a bit at the start of July, but it has picked up again, and we’re optimistic that will continue.” Encouraging signs, he says, include a number of space searches north of 20,000 sf, plus a willingness among tenants to do longer terms, from three to five years in many cases, possibly reflecting a sense that the bottom is approaching and rates should be “locked in.”

Terms vary, but TradeCenter 128 has space in the $24 per sf range for tenants needing more than 3,000 sf, and $28 per sf for those below that size. Anderson would not divulge specifics of specific leases. In the Healthcare Sources lease, Matt Adams of Cushman & Wakefield represented the tenant, while Derek Cook negotiated in-house for Cummings. Colleague Jeremy Hood handled the Connective Orthopedics deal, with T3 Realty Advisors VP Michael Shreve representing the tenant. Winchester Hospital was a direct deal negotiated by Michael Truesdale.

Specific deals are not provided, but research from FHO Partners shows Woburn posted 40,000 sf of net positive absorption for its office inventory through mid-year, dropping the vacancy rate slightly from 19.0 to 18.6 percent. That bucks Route 128 Central’s difficult start in which it posted negative net absorption of 682,000 sf in the past two quarters, boosting its vacancy rate to 19.5 percent. The average asking rate for that submarket is $27.51 per sf, according to FHO Partners.