Burlington Office Asset Listed by Avison Young Could Hit $28M

BURLINGTON—The harsh stretch which darkened 70 Blanchard Rd.’s doorstep in the early 1990’s real estate bust faded long ago, and its steady performance in the ensuing decades are about to pay off for E&F Realty Associates. The private investment firm which adroitly scooped up the 107,400-sf office building at an FDIC auction for $5.2 million in Feb. 1993 is now trading it through Avison Young in a process yielding nearly five times that amount should market sources prove correct.

The four-story building that turns 30 in 2016 is being listed minus any pricing guidelnes, explains AY principal Scott Jamieson, declining to discuss rumors that bidders are winding up in the $28 million range with an opening round of offers slated for next week.

In what he terms “a compressed marketing program,” Jamieson acknowledges a warm investor reception to the building known as 128 Corporate Center, an assignment he describes as a “100 percent leased value-add opportunity.” Acceding those two concepts “do not usually go together,” Jamieson explains that “the gap between in-place rents and what the market rates are is so large, it definitely fits that description,” especially considering 90 percent of the space has its leases expiring by 2019, meaning the income potential can be realized over the near term.

Presently, 128 Corporate Center averages $21.68 per sf, whereas comparable first-class product in Burlington is achieving upwards of $33 per sf. “And we think it is only going to continue going up,” says Jamieson, pointing to another brokerage house that recently gave a presentation portending $40 per sf rents are inevitable now that Burlington is rivaling Route 128 mainstay Waltham for a battle over the most desirable office market.

“I’d have to agree with that ($40) prediction,” says Jamieson. While hardly calling Waltham a has-been, he points to an unending parade of tenants streaming into its burgeoning peer, some from the north seeing Burlington’s vast amenities as a way to recruit talent and others arriving from the urban centers who want the next closest thing to Boston, Cambridge and the inner suburbs while providing a modicum of relief from rent spikes of even greater magnitude in those communities. In its latest survey, Cresa Boston puts the Route 128 North submarket including Burlington at $33.50 per sf for Class A asking rents and shows a vacancy rate of 8.6 percent involving 11.4 million sf. Rents in downtown Boston are at $56.32 per sf and $62 per sf in Cambridge—$80 per sf for Kendall Square. The Waltham submarket averages $38 per sf, Cresa reports, the tenant representation firm tracking 10.3 percent vacancy for 24.1 million sf.

Besides the robust environs, Avison Young is welcoming bidders to take a hard look at 128 Corporate Center straight on in weighing its value. “The building has been impeccably maintained,” Jamieson says, noting E&F Realty just spent $1.2 million recently on new boilers, HVAC systems and the roof. “It’s bones are very solid,” relays the broker who is joined by Capital Markets leader Michael Smith and Vice President Brandon Dickason on the exclusive assignment. Senior VP Michael Buckley and Financial Analyst Derek Opert are aiding suitors on debt prospects.

Jamieson cites cosmetic improvements as the main issue to be addressed in positioning 70 Blanchard Rd. for enhanced income. Other valuable intangibles include having “a great presence” and location the industry veteran says provides a mix of visibility and a buffer zone from the traffic gridlock Burlington has long been known for, a condition expected to become more acute given the continued expansion of its corporate, residential and retail constituencies.

Blanchard Road is on the northbound side of Route 128, almost directly across America’s Technology Highway from the Burlington Mall but able to gain access and exit away from that part of town. There is plentiful retail for tenants on that flank, Jamieson outlines, with the acclaimed Wayside Commons lifestyle shopping center a short trip away featuring the likes of Capital Grille and LL Bean. Blanchard Road is also on the Boston and Cambridge side of the action and adjacent to well-regarded bedroom communities such as Arlington, Stoneham and Winchester.

“We love the listing,” says Jamieson in praising his clients for providing a viable opportunity that capital has quickly embraced. “The response from investors has been broad and enthusiastic, and we are excited to see what offers come in next week,” he says. “We expect the new owner is going to do very well with it.” A savvy buyer could even boost income at the outset, he observes, with some tenants in what has been a popular venue potentially willing to strike a “blend-and-extend” extension in return for a measured rent hike.