Patient Capital Has 495 Business Park Primed to Attract Tenants

TEWKSBURY, MA—Patience is famously touted as a virtue, but at The 495 Business Center, it is also a cornerstone of the lease-up strategy for owner Capital Commercial Investments and Newmark Knight Frank, exclusive listing agent for the 85-acre, 750,000-sf complex. Acquired in March 2007 for $20.3 million just when the office and industrial sectors were imploding, Texas-based CCI did not flinch, instead opting to take a long view and position the three-building park for an eventual recovery by spending millions of dollars upgrading both inside and out as part of an overhaul that has yielded a thoroughly modern opportunity for suburban tenants.
“We are up and ready for business,” proclaims NKF principal Christopher A. Curley, who is overseeing the assignment with colleague Dan Collins. “There’s nothing else that compares to it on quality, and that’s what tenants want today.”
The prevailing strategy for landlords in the brutal bust has been to either mothball product or fight vociferously to retain tenants. While the latter trend has made it harder to fill space, with major prospects such as Chelmsford-based Zoll Medical Corp. opting to stay in place, Curley praises CCI for believing in the property enough to up its ante rather than hunker down, spending $1.5 million alone on landscaping. The landlord has refurbished the parking lot and overhauled existing space with exterior improvements, construction of an elaborate central lobby and readying the interior space for immediate fit out for any tenants who commit.
CCI specializes in value-added investments, explains Managing Director William S. Kouchalakos, with the firm’s portfolio concentrated in the southwest. The 495 Business Center is its only New England investment, although Kouchalakos says CCI is interested in making further inroads as opportunities arise.
For the time being, however, locally based Kouchalakos and CCI are focusing their attention on the Tewksbury undertaking. Concurring with Curley, Kouchalakos says users are far more likely to commit to a product that shows well as is rather than on a rendering or power point presentation. Having seen the transformation take shape over three years, Kouchalakos says the reaction from tenants has grown increasingly enthusiastic. “It is mind-boggling to people what has happened there,” he says. “We’ve had a very positive response.”
On paper, the I-495 North office market still faces challenges such as an availability rate of 23,6 percent for 9.7 million sf in a Q3 survey released this week by FHO Partners. Net absorption for I-495 North YTD is down by 281,000 sf, FHO indicates, representing the largest decline among any suburban submarket surveyed.
But while the recovery is taking its time in arriving on the outer fringe, Curley says there are encouraging indications at the ground level to suggest the freefall has finally ended, with companies increasingly looking for expansion space and others being forced into the fray due to expiring leases. A tendency to sign short-term extensions during the recession has resulted in a rising tide of firms whose leases are winding down, according to market watchers, offering hope that the empty inventory will find takers. “This was the most active summer I can remember,” reports Curley. “And it’s real—we are seeing people who do not have a lot of lead time” to do a deal. Those include a number of large users whose options are especially constricted. The 495 Business Center has 325,000 sf of contiguous space available, even though prospects as little as 5,000 sf are also being welcomed to join the tenant roster.
To Kouchalakos, the approach has been to become best-in-class, appealing to the combined desire among tenants to have state-of-the-art, functional space while still enjoying cost savings compared to that found along Route 128. “It’s unusual for (I-495) to have a property like ours,” says Kouchalakos, with CCI anticipating there are enough firms who want to remain in the Merrimack Valley that will respond favorably to the opportunity.
Curley points to the disruption that can be generated when relocating from one region to another, and says a skilled Merrimack Valley workforce is coveted by many employers who can also feed off talent across the border in New Hampshire. Getting to 495 Business Center is convenient for employees and clients, adds Curley, given a location sandwiched between Interstate 93 and Route 3, offering direct access to the Granite State and Boston. “It’s really the only large building in that vicinity,” he says.
The 495 Business Center is easy to spot as well, given 3,300 sf of frontage along Interstate 495. That should benefit any company seeking to promote itself by negotiating signage rights on the buildings, says Curley, whereas there is also extensive parking to service denizens of the park.
Having seen the asset reinvigorated from an aging commercial property into a gleaming complex now garnering fresh attention from the submarket, Curley says he is optimistic CCI is on the verge of reaping the fruits of its extensive labor. “The larger tenants are hard to nail down, but it’s getting a lot easier,” says the veteran broker. “We’re definitely getting a good look from them . . . It’s just a matter of time now.”