December 21, 2004
Celtics lease space on Causeway Street
The Boston Globe

The Boston Celtics have signed a 10-year lease for corporate headquarters at 226 Causeway St. in Boston, near the FleetCenter, where they play. The 23,079-square-foot lease, in a building owned by Intercontinental Real Estate Investment Fund II LLC, will begin in August and is on the fourth floor, overlooking the sports facility. The Causeway, as the former six-story bakery building is known, has undergone a complete renovation since 1999 and has 108 residences on six new top floors. Intercontinental Real Estate Corp. and Richards Barry Joyce & Partners negotiated the lease. (Thomas C. Palmer Jr.)

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November 1, 2004
Report: R.E. Pulse Strong For Life Sciences Market
Bankers & Tradesman

Greater Boston Lab Vacancy Rate Falls 3 Percent; Lexington Emerging as Top Suburban Destination

As the World Series champion Red Sox proved last week, good things come to those who wait, and that is essentially the message being delivered in bioSTATus, a twice-yearly overview of Greater Boston’s life sciences real estate market.

Compiled by Richards Barry Joyce & Partners, the latest report being released this week acknowledges the region’s lingering struggles, including a tepid reception on Wall Street for some local biotech firms which have gone public during the past year and the glut of available laboratory and research space emanating from new construction or by firms downsizing. Even so, bioSTATus offers reasons for optimism going forward, including additional evidence that Massachusetts is faring well on the worldwide stage as a center for biotech and pharmaceutical research.

“Generally speaking, it’s positive,” RBJ&P director of research Brendan Carroll said of the bioSTATus report, which covers the second and third quarters of 2004. Vacancy rates for laboratory space fell in most sectors during that timeframe, with net absorption of 58,000 square feet posted in Cambridge, while laboratory rental rates appear to be holding their own even in the face of the new supply being added. By Carroll’s estimates, 2.2 million square feet of new lab space has been developed in Greater Boston since the fourth quarter of 2001, offsetting 1 million square feet of actual leasing.

“Demand is not the problem,” explained Carroll, predicting that the lack of new space in the pipeline ultimately should reverse the recent difficulties, which saw the laboratory vacancy rate skyrocket from 7.3 percent in 2001 to 19.9 percent by early 2004. In the new bioSTATus, RBJ&P estimates there was 691,000 square feet of positive absorption in the second and third quarters in Greater Boston, bringing the area’s laboratory vacancy rate down 3 percent to 16.9 percent.

The opening of Merck & Co.’s new research laboratory in Boston’s Longwood Medical Area helped bolster the absorption numbers, with Merck increasing Boston’s laboratory market by 410,000 square feet to 2.4 million square feet. And while that and the arrival of Novartis AG earlier in the year to Cambridge have been on the radar screen for some time, Carroll said the physical presence of both firms has further bolstered the perception of the region’s life sciences universe.

According to bioSTATus, Novartis AG and Merck are helping foment additional interest in the Bay State by competitors, with Schlumberger Ltd., Genentech and Serono SA among the firms now exploring possible locations in the area. The biggest draw for all those companies, and the state’s biggest benefit, has been the concentration of qualified researchers in the area. Even so, Carroll said it is likely that firms will have to bring in talent from outside the region to fulfill their research employment needs, increasing the need for new space down the road.

City vs. Suburbs
Massachusetts also is looking good in drawing new venture capital funding for life sciences, said Carroll. During the 12 months ended June 30, Massachusetts biotech companies nearly doubled the amount of venture capital financing received compared with any previous 12 month period, with $891 million invested in the latest stretch. The average investment size for Massachusetts firms has also grown, bioSTATus reports, from about $6 million in the mid-1990s to $14.6 million for the 12 months ending June 30. The average investment nationally in that period for biotech companies was $11.5 million.

Carroll cited several reasons for the local increases, including a desire among investors to finance research conducted by large companies or to back biotech products further along in the approval process. Massachusetts firms tend to be larger and have done a better job of bringing products through advanced levels of testing than other regions, including the Silicon Valley, which remains the center for most venture capital funding of life sciences, Carroll said.

Although he warned that the region must do a better job to promote initial phase development of products, Carroll opined that venture capital’s growing aversion to risk has made them more likely to invest in advanced-stage research, a trend that would benefit Massachusetts.

On the flip side, with Wall Street typically the exit strategy favored by venture capitalists, Carroll concurred that the lukewarm response to several initial public offerings from local biotech companies would seem to curb investor enthusiasm in that regard. “Its an interesting clash,” he agreed, noting that in the last bioSTATus report, there were six Massachusetts-based biotech firms which had filed for an IPO with the Securities and Exchange Commission. All four which subsequently completed their IPOs were forced to reduce the amount of their offerings and the valuation of their companies, while one firm withdrew their IPO completely following negative lab testing results. The sixth company has been idle in its second attempt after filing its IPO six months ago, according to bioSTATus, which concluded that “these performances should serve as a cautionary note to the industry and may threaten valuation of earlier-stage efforts.”

Cambridge remains the center of life sciences activity in the region, and bioSTATus indicated that the city remains relatively strong despite such large space opportunities as 210,000 square feet at 675 West Kendall St. and 180,000 square feet available at 640 Memorial Drive. Cambridge has a laboratory vacancy rate of 20.4 percent at present, down 0.8 percent from the previous bioSTATus report.

Among the recent deals completed in Cambridge was 83,000 square feet at 75 Sidney St. subleased by Genpath and Metabolix occupying 28,000 square feet at 21 Erie St. Those deals have helped drop the vacancy rate for Class A lab space in mid Cambridge to 9 percent. On the suburban front, Lexington has been the biggest winner in 2004, with NitorMed taking 52,000 square feet at Lexington Technology Park and Hypnion taking 102,000 square feet in the park, the former headquarters of Raytheon Inc. Just up the street on Hartwell Avenue, Eyetech leased 47,000 square feet. In the report, bioSTATus maintains that the emergence of Lexington as a suburban destination for biotech companies speaks to the maturation of the industry vs. the decentralization of the workforce, with researchers employed in Cambridge during the 1990s simply aiming to move closer to where they live.

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October 18, 2004
Independence and Young Talent Writing RBJ&P’s Success Story
Banker & Tradesman

It was cast in the new millennium, and Richards Barry Joyce & Partners seems intent on keeping things New Age.

Having marked their third anniversary this summer, RBJ&P leaders credit a fresh outlook for the company’s rapid ascension in Boston’s highly competitive commercial real estate sector. Backed by a compensation system that eschews commissions, RBJ&P touts a team-oriented approach favoring cooperation vs. competition, providing a different model than seen in traditional real estate service companies.

“It’s very challenging in an industry so ingrained in the commission mentality, but we think it’s a better way to do things,” explained RBJ&P President Robert B. Richards Jr. “When something good happens, it is positive for everyone in our company, and that fosters greater teamwork.”

After bursting on the scene in mid-2001 when nine industry veterans broke ranks with various local firms, RBJ&P now has nearly 50 employees who are rapidly filling the 37th floor at Boston’s Exchange Place, quarters the company expanded into this summer after outgrowing its space in the tower’s 29th floor. Along with Richards, all of the founders remain, those being John P. Barry, Michael R. Frisoli, Michael J. Joyce, John M. Lashar, Brian M. McKenzie, Stephen M. Purpura, Johnathan M. Varholak and John C. Wilson.

Despite the veteran base, Richards credited the company’s pursuit of young talent as another reason RBJ&P has flourished. Some, such as Paul A. Leone II and Research Director Brendan Carroll, do have commercial real estate experience, but others sport divergent backgrounds. Amanda G. Lyons, who assists the firm’s National Brokerage Team, had managed a design studio and later was an account executive with iCrossing Inc. prior to entering commercial real estate. Associate Chris McCauley is a certified public accountant who worked at Arthur Andersen and later software maker Oracle Corp. as a sales representative.

McCauley today is part of RBJ&P’s Cambridge group, assisting in landlord and tenant representation. Given real estate’s impact on the bottom line, McCauley’s accounting acumen provides extra insight for clients, said Richards, adding that the firm felt the high-tech sales experience would steel him for the demanding real estate brokerage business. “To us, Chris had a very attractive skill set,” said Richards. “That’s a unique combination of talent.”

Other up-and-comers at RBJ&P include suburban specialist Jamey Lipscomb, who matriculated from CBRE/Whittier Partners; Shawna Plociak, director of national accounts; and associate Shannon Herold, a member of the firm’s downtown operation. Richards cited the arrival of Leone two months ago as a coup for RBJ&P, with the Holy Cross alum coming over from Trammell Crow Co. after five years in the suburban west markets.

“We had noticed and admired his work from a distance for years,” said Richards, with the shift to RBJ&P allowing Leone to partner with Lashar, providing strong representation in the broker-rich MetroWest area. Richards is equally enthused by the hiring of Carroll in March, claiming he “has taken our research to a completely new level.”

“I had high expectations, but he has easily exceeded them,” said Richards. “Not only is he producing more reports than anyone I know, it is more creative and more forward-thinking research than anything we’ve seen before.”

‘Total Flexibility’
Carroll credited the willingness among RBJ&P staff, such as the Marketing Department, for helping increase the firm’s annual output to 43 publications from four previously, ranging from market-specific overviews to in-depth details on drivers such as the research-and-development market or life sciences. Having worked for a national real estate company with a rigid research template, Carroll said he appreciated RBJ&P’s eagerness to let him develop the Research Department into a multi-pronged tool valued both in-house and by company clients.

Carroll has switched the delivery date of some research to assist companies with quarterly reporting deadlines, for example, and is striving to ensure data is better defined geographically and by asset class. Along those lines, RBJ&P has broken out the industrial figures to delineate warehouse/distribution space from manufacturing properties. The two are sufficiently different from each other to warrant the separate treatment, said Carroll, maintaining that independent, local firms are better equipped to decipher trends or sort information than those using cookie-cutter formulas.

“The national philosophy just doesn’t work,” he said. “It’s like trying to fit a square peg into a round hole.”

RBJ&P not only encourages innovative number crunching, Carroll said he gains extra knowledge by the willingness of brokers who can identify street-level changes or explain market anomalies. “At [RBJ&P], there’s a very real feeling of being on a team, and the importance of the Research Department is also very real,” he said. “Everyone here is committed to having the most appropriate research platform for the client.”

Whatever the reason, RBJ&P certainly has emerged as a formidable player in Boston’s commercial real estate scene, as well as beyond. The company is doing business in several markets nationally and is also assisting clients looking to expand overseas. RBJ&P is employing a different strategy than many competitors by not joining a network of companies such as Oncor International or GVA Worldwide. “Why should a client use the third-best person in Detroit just so they can get the best person in Chicago?” argued Richards. “We have total flexibility, and if people aren’t getting the job done, we’re not shy about letting them go.”

Boston-based OneBeacon Insurance Group was comfortable enough with RBJ&P to select the firm from several competitors to handle its real estate responsibilities throughout the country, while the company has scored numerous other victories during its brief existence. The firm represents several significant buildings throughout the region, including such downtown Boston towers as 99 Summer St., 75 State St. and 200 State St. In another milestone, Equity Office Properties retained RBJ&P as leasing agent for 245 First St. in Cambridge, a rare instance that the national real estate company had hired an outside firm in that capacity.

RBJ&P also has dabbled in investment sales, recently brokering the $2.2 million sale of a Marlborough building and a 23,000-square-foot Billerica building, 9 Executive Park Drive. Many of the company’s veterans have experience in the sales arena, although it still makes up only about 10 percent to 15 percent of company revenues. “I do think that will grow over time,” said Richards, although he stressed there are no plans to launch a group dedicated to investment sales as seen at other firms.

Overall, Richards said he is encouraged by RBJ&P’s position. The firm exceeded both its one-year and three-year goals, he said, and is on track to better its five-year aims. In that regard, Richards said he is not surprised at the firm’s performance. The bonus, he said, has been in the corporate culture RBJ&P has fostered.

“I never had any doubt we would be successful,” he said. “The biggest surprise to me has been the level of enjoyment and happiness we’ve had as a company during the first three years ... It has just been a real joy to be a part of.”

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July 29, 2004
Lab space proposed for Little campus
Boston Herald

The Cambridge campus of legendary but defunct research firm Arthur D. Little would be demolished to make way for a giant laboratory development under a proposal from a Needham builder.

The Bulfinch Cos. wants to bulldoze the aging 1950s- and 1960s-era Little campus, which abuts Route 2 near the Alewife MBTA Station, and replace it with buildings nearly twice the space. Little, after 116 years in the consulting business, went bankrupt in 2002 and was divided up and sold.

The Bullfinch proposal represents the first large development project in Cambridge's Alewife section in several years and provides another sign of the rebounding economy, noted Robert Richards, head of Richards Barry Joyce and Partners in Boston.

``It's a pretty significant move,'' Richards said. ``For new construction in (Alewife), it has to be at least 10 years, maybe 15 years.''

Bulfinch's plan would replace buildings housing 416,000 square feet of lab and office space with an 826,000-square-foot research park.

Bullfinch's proposed Cambridge Discovery Park has an anchor tenant for its first phase, the developer says in a plan submitted to the state.

Bulfinch will build a 134,298-square-foot lab for the Smithsonian Astrophysical Laboratory, a branch of the Harvard-Smithsonian Center for Astrophysics. The planned lab includes a small annex where components of Smithsonian's Magellan telescope project can be tested, the developer's plan states.

In a move to defuse possible opposition to the project, Bulfinch proposes returning part of the site, which borders an extensive wetlands preserve, back to its ``natural'' state. That will mean removing a large parking lot, demolishing a building and covering the area with topsoil and seed, the plan states.

In a later phase of the project, the newly created grasslands will be ``integrated'' into the surrounding marshes, the plans submitted to the state's Executive Office of Environmental Affairs show.

June 24, 2004
After three years, office vacancies drop
Boston Herald

Boston's hard-hit commercial real estate market, bolstered by rising job growth, may finally be starting to dig out, a new study finds.

After rising steadily through three years of recession and on into the recent economic recovery, the amount of empty office space in Boston and the suburbs may finally be shrinking, Richards Barry Joyce & Partners reported.

Overall, office vacancy rates, after hitting highs in the first quarter, have begun falling at the midyear mark.

"We may well have hit bottom," noted Brendan Carroll, director of research at the Boston-based commercial real estate firm. "The signs of stabilization are finally there."

A rebound in jobs is a key factor in the modest improvements of the past few months, with economic growth closely tied to demand for office space, he said.

Leading the way are key office sectors, such as the financial district, Back Bay and the belt of office complexes on Route 128.

All three saw drops in the amount of vacant corporate space, Richards Barry reported.

Boston's financial district saw its office vacancy rate drop to 13.5 percent from 14.8percent, with 459,000square feet of previously empty space occupied.

The Back Bay saw empty office space shrink to 13.1percent, from 14.7 percent at the start of the year, according to Richards Barry.

A pair of sizable leases at the 31 St. James St. tower, developed in the late 1990s, and the newly opened 131 Dartmouth St. office complex near Back Bay station also helped, the firm found.

Meanwhile, the amount of empty office space on Route 128 dropped by 537,000 square feet, bringing the vacancy rate down to 21.4 percent from 22.4 percent, Richards Barry reported.

Some areas didn't fare as well.

The South Boston Seaport held steady at about 18 percent office vacancy, while the amount available for lease increased out on more distant Interstate 495.

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May 22, 2004
Of leases, subleases, and soccer
The Boston Globe

This week, deals big and small:

Fulfillment America, a national e-commerce and marketing support company, is subleasing 120,000 square feet at 17 Progress Rd., Billerica, an area that can use some good news on the leasing front. Fulfillment America, represented by Oddo Inc. of Winchester, is taking space from Brooks Automation, a sublandlord, and is expanding and relocating from 1 Burlington Ave., Wilmington.

Cresa Partners Boston, which specializes in handling tenants and corporate services and has 42 North American locations, represented Chelmsford-based Brooks, which supplies hardware and software to the semiconductor industry. Progress Road LLC owns the building.

Immunetics, expected to take 8,500 square feet at 27 Drydock Ave. in South Boston, is actually occupying 8,800 square feet, and at half the price CEO Andrew E. Levin expected to pay elsewhere.

Immunetics recently received a National Institutes of Health grant to fund development of a diagnostic kit to test for severe acute respiratory syndrome, or SARS.

At a recent gathering, Mayor Thomas M. Menino said the Immunetics lease is part of a program called LifeTech Boston, with a goal of creating 10,000 biotech-related jobs by 2010. Glen Comiso runs the program for the Boston Redevelopment Authority, which gave Immunetics a low-interest, $125,000 loan. And the site is in the city's Empowerment Zone, where employers get a $3,000-a-year credit for each employee.

Menino and BRA director Mark Maloney were at another event this week, celebrating the expansion and renovation of Katsiroubas Brothers, one of the city's largest produce distributors. At 40 Newmarket Square in Roxbury, it's part of the three-year-old Back Streets program to provide help to commercial and industrial companies.

Patriot Partners LLC of Concord, owner-developers of the old Raytheon site now known as Lexington Technology Park, have a second tenant. Hypnion Inc., another life sciences company, is joining NitroMed and has signed up for 33,647 square feet of space. NitroMed, to occupy 52,000 square feet in July, is moving its headquarters from Bedford. Hypnion, now based in Worcester, plans a fall move-in, after a complete renovation.

Patriot Partners, led by Joseph Zink, president of Atlantic Management, and Steve Rice, principal of Mohawk Partners LLC, is developing up to 631,000 square feet of space for biotech and life sciences firms at the intersection of routes 2 and 128.

Globe Specialty Products Inc. has leased 68,153 square feet at 27 Otis St., Westborough. A subsidiary of the Globe Newspaper Co., it was represented by Trammell Crow Co. The landlord, Invesco Realty Advisors, was represented by Richards Barry Joyce & Partners.

Holbrook Town Meeting members this week gave overwhelming approval to a plan to rezone 79 acres at 221 Union St. for Old English Square, a mixed-use development with residences, retail shops, and open space. Mullins Co., of Braintree, plans New England-style architecture in the luxury community.

There will be 211 one- and two-bedroom condos. Up to 75,000 square feet of retail and office space is planned, along with 54 acres of open space and 7.7 acres to be given to the town for recreational use, including a soccer field to be constructed by the developer.

Construction is expected to begin in a year, with occupancy in the spring of 2006.

While others scoop up single-tenant properties, Bluestone Holdings LLC of Newton keeps what president Mark Schuster says is a 100 percent occupancy rate with multiple tenants and some occasional creative shuffling. Symantec Corp., a huge California software company, outgrew its space and wanted to move -- but CSC Consulting Group Inc., a tech firm also from the West Coast, had more space than it needed. The musical desks at Waltham Place involved Symantec moving from 266 Second Ave. into CSC's 100,000 square feet at 275 Second Ave. CSC consolidated at 266 Second Ave. by taking 21,000 square feet vacated by Semantic.

Thomas C. Palmer Jr. can be reached at tpalmer@globe.com.

This story ran on page D12 of the Boston Globe on 5/22/2004.

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May 10, 2004
Company’s Sublease in Boxboro Another Victory for the Suburbs
Banker & Tradesman

Helping another piece of excess office space disappear from the suburban Boston landscape, Applied Micro Devices is subleasing the second floor at 90 Central St. in Boxboro, with the firm taking nearly 65,000 square feet from Agilent Technologies.

“It’s good news for the market,” said Richards Barry Joyce & Partners principal John C. Wilson, who represented Agilent in the negotiations along with RBJ&P associate Jamey Lipscomb. The Boston-based real estate services company has been retained to sublease the entire 175,000-square-foot building on behalf of Agilent, which occupied the property shortly before consolidating into another nearby facility.

The AMD agreement offers a modicum of momentum for the Interstate 495 North office market, which was hit hard by the bursting technology bubble that began in early 2001. Firms such as Lucent, Tellabs, Cisco and Agilent all put extensive amounts of space up for grabs simultaneously, leading to a spike in availability rates and a sharp drop in rents.

According to Spaulding & Slye Colliers, the availability rate for the North market was 34.2 percent at the end of the first quarter. That represents a slight decrease in availability from the start of the year, but is still dramatically higher than the 10.9 percent recorded by Spaulding & Slye five years earlier.

Wilson concurred that I-495 North has seen as difficult a stretch as any submarket, but he also said there are indications the worst may be behind the area. “Six months ago, I wasn’t that optimistic, but demand has really picked up since then,” he said. “Things are finally starting to happen.”

‘A Huge Lottery’
The I-495/Massachusetts Turnpike submarket enjoyed 436,000 square feet of net absorption in the first quarter, Spaulding & Slye estimates, while brokers such as David J. Pergola of Meredith & Grew say they are generally encouraged by the level of tenant showings being conducted.

“Velocity wise, we’re very busy,” said the M&G vice president. “We’ve seen a noticeable uptick in activity.”

In one of the larger deals of the year, Pergola and his father, M&G Executive Vice President David L. Pergola, represented Empirix in a 60,000-square-foot sublease at 20 Crosby Drive in Bedford, with an expansion option for the entire 74,000-square-foot building. The sublessor, RSA Security Systems, was represented by T3 Realty Advisors of Waltham.

The Empirix deal, first reported last month by Banker & Tradesman, is one of several sublease pacts struck of late, offering the prospect that landlords may no longer have to compete against such a low-cost alternative. Codman Co. principal David Campbell noted that the amount of term left on space being offered for sublease continues to dwindle, although he stressed that the overhang of supply remains formidable. “Anybody that lands a 60,000-square-foot deal right now is winning a huge lottery, because there are a ton of opportunities available for a tenant of that size,” said Campbell, describing the AMD sublease as a classic example of the so-called “flight-to-quality” trend prevalent at present.

“That’s good product,” Campbell said of 90 Central St., a building owned by Wells Real Estate Funds, which purchased the property in 2002 from Koll Bren Schreiber. Neil Ross and Greg Zais of the Staubach Co. negotiated the deal for AMD.

David J. Pergola acknowledged that the suburban office market remains soft, but added that the cream of the crop offerings are finally beginning to see commitments. That is particularly true for “plug-and-play” subleases, in which the tenant is essentially given a turnkey facility replete with furniture, cubicles and even in-place technology. One such property in Billerica leased to Nortel Networks was recently taken over by a company servicing the gift industry, while an adjacent property has reportedly now been leased to GE Panametrics. Owned by Archon Atlantic, that building will undergo an expansion to further accommodate Waltham-based GE Panametrics.

“Most of the really solid plug-and-play deals have been eaten up, and the challenge now is to educate companies that they will not be able to choose from six of those opportunities anymore,” said David J. Pergola. The Nortel Billerica properties being taken off the list will further erode that inventory. Fortunately for the leasing public, Meredith & Grew does have a substantial plug-and-play offering on the market as it attempts to sublease 7 and 9 Technology Drive in Westford on behalf of Teradyne Inc. The properties are located in the Westford Technology Park, sited just off I-495.

Totaling 230,000 square feet, the buildings are being offered either separately or together, said David J. Pergola, who is handling the assignment with Meredith & Grew Assistant Vice President Matthew S. Adams. “They are outstanding buildings,” said David J. Pergola, a view apparently shared by other industry professionals. “They will get attention,” Campbell predicted of the Teradyne properties. An adjacent building at 10 Technology Drive has just scored a coup, with Red Hat Software subleasing more than 40,000 square feet previously occupied by Juniper Networks.

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May 3, 2004
Industrial Sector Offers Hope In Dismal Commercial Climate
Banker & Tradesman

The gloom looms large in Greater Boston’s industrial market, but doom is not in the offing for that commercial real estate sector, according to Richards Barry Joyce & Partners research director Brendan Carroll.

“There are definitely reasons to be optimistic,” Carroll insisted last week, even though RBJ&P estimates there was nearly 2 million square feet of negative absorption in the region during the first quarter of 2004, including a 1.2 million-square-foot dip in the warehouse/distribution absorption level. Spaulding & Slye Colliers recorded similar trends, estimating that industrial properties saw absorption in the red by 1.3 million square feet during the opening salvo.

“It was a tough start,” acknowledged Carroll, who recorded another 706,000 square feet of negative absorption in the manufacturing arena. The overall vacancy rate for the quarter jumped from 14.7 percent at year end 2003 to 17.1 percent three months into 2004, the RBJ&P report revealed.

If one looks deeper into the numbers, however, the deterioration is not as foreboding as it might seem, said Carroll, explaining that a major chunk of the added supply comes from sizeable properties that have been working their way through bankruptcy for the past few years, including distribution centers operated by defunct retailers Ames and Hit or Miss. “It really reflects dynamics that happened a few years ago,” said Carroll.

Another piece of old news also was factored into the latest figures, Carroll said, that being a 600,000-square-foot availability in Billerica caused by the departure of Kmart’s distribution operations. The market will have to absorb that space, but Carroll said observers should not be fooled into thinking industrial activity is on the wane. The recovery of employment should help manufacturing properties, Carroll said, while warehouse/distribution facilities can take solace in the steady improvement of the general economy.

“The direction for warehouse/distribution is going to be pretty favorable in the future,” Carroll said. “The driver is consumer demand, and if people are buying more products, that’s going to increase demand for warehouse space.”

RBJ&P principal John C. Wilson said the Interstate 495 West market has held up well, but did express concern about the North and Northwest markets, partly due to the Billerica availability and another one that just occurred in Wilmington that is bringing an additional 400,000 square feet to the market. “We are a little concerned about the vacancies in the North, and in the South,” Wilson said. “We think it is going to put some pressure on pricing there.” The I-495 West area has remained strong, Wilson said, and seems to be retaining its rental rates.

Covering 59.5 million square feet, Spaulding & Slye put the overall vacancy rate for industrial space at 16.3 percent at the end of the first quarter, while availability was pegged at 22.5 percent. That compares to 14.3 percent and 19.2 percent figures, respectively, at the end of 2003.

Negative Results
An anemic net absorption of 5,576 square feet in the I-495/Massachusetts Turnpike area was the only plus outcome in the eight submarkets tracked by Spaulding & Slye, with all others recording negative results. The worst occurred in the Northwest submarket, where the Kmart departure at 90 Salem St. spiked negative absorption to 629,000 square feet. One of the smallest submarkets, the Northwest saw its availability rate soar to 54.5 percent in the first quarter, Spaulding & Slye estimated.

Elsewhere, Spaulding & Slye posted negative absorption of 212,000 square feet in the South submarket and 370,000 square feet in the North. Besides the Northwest, the highest vacancy rate was registered in the I-495/South submarket, which had a 21.7 percent vacancy and a 28.7 percent availability rate for its 10.1 million-square-foot inventory.

Efforts to contact Spaulding & Slye principal William D. Bailey were unsuccessful, but in a recent forecast, the veteran industrial specialist predicted difficult times ahead for older, outmoded properties given the large amount of available space circulating in the market. Average rents will dip slightly in early 2004, he said, although Bailey did offer a measure of hope in such potential warehouse/distribution requirements as BJ’s Wholesale Club and Dunkin Donuts.

Currently, National Development is pursuing a 410,000-square-foot, built-to-suit project for Dunkin Donuts in Bellingham. That initiative is working its way through the community approval process. Speculative industrial construction is on the decline, according to Bailey, with only a 130,000-square-foot facility in Northborough scheduled for delivery over the near term.

One deal that bolstered the West Bridgewater industrial scene was a 93,000-square-foot lease to Sullivan Tire at 393 Manley Road, with that firm taking over space recently left by Harte Hanks. Cushman & Wakefield brokers Cathy Minnerly and J.P. Plunkett represented the landlord in that deal, which actually signed in early April. Sullivan was represented by Mark Donahue of Donahue & Assoc.

Plunkett said he is encouraged by the number of companies looking for space under 75,000 square feet, but said larger industrial requirements are not as prevalent as he had hoped they would be at the beginning of 2004. “I wish there was a bit more traction,” he said. Still, Plunkett said deals are beginning to occur, including a 17,500-square-foot renewal by Chiquita Banana at the Cabot Business Park in Mansfield. Plunkett and Minnerly were brokers for the tenant, while Steve Clancy and Jim Nicoletti of CB Richard Ellis acted on behalf of the landlord, AMB Corp.

On the investment front, capital continued to pursue industrial buildings despite the dour fundamentals, with investors convinced that the product type offers more stability and upside than seen with R&D or office assets. Paradigm Properties, for example, has launched a new fund that will seek to invest $50 million to $70 million for high net worth individuals. Industrial buildings are among the target assets, with a criteria for 12 percent to 14 percent returns.

Among the significant industrial acquisitions in the first quarter was New Boston Fund’s $9.3 million purchase of 275 Bodwell St. in the Avon Industrial Park in Avon. The 210,000-square-foot distribution building is 100 percent occupied.

Elsewhere, Intercontinental Real Estate Corp. of Brighton acquired two buildings at the Devens Commerce Center in central Massachusetts, The space totaled more than 730,000 square feet. In North Dartmouth, Volex Inc. sold a 55,000-square-foot warehouse at 358 Faunce Corner Road for $1.8 million. That deal was brokered by Joe Flynn and Dennis Croke of NAI Hunneman Commercial Co. in Boston.

Joe Clements may be reached at jclements@thewarrengroup.com.

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April 1, 2004
R/D Tech signs lease in Waltham
The Boston Globe

R/D Tech Inc., which makes nondestructive testing systems, has signed a five-year, 56,826-square-foot lease at 48 Woerd Ave. in Waltham, a building bought this year by Intercontinental Real Estate Corp. for $18.8 million. R/D Tech is subleasing from Cisco Systems Inc. and will put its Panametrics NDT division, acquired in January from General Electric Co., in the space. R/D Tech was represented by Richards Barry Joyce & Partners, which also brokered a 45,000-square-foot lease for the accounting firm Carlin, Charron & Rosen, which is consolidating its Newton and Worcester offices in new corporate headquarters at 1400 Computer Drive, Westborough. The building is owned by Massachusetts Laborers' Pension Fund and Westborough Investment Corp. (Thomas C. Palmer Jr.)

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March 19, 2004
Brendan Carroll Joins RBJ / RBJ Brokers Transaction for Gradient
Affordable housing to be priority for new GBREB head
Boston Business Journal

With Mayor Thomas Menino trying to make Boston a 24-7 city and Gov. Mitt Romney pushing to bring business to Massachusetts, there has been a resounding cry to do something about the lack of affordable housing in the state.

Fact is, while public officials -- well aware of the dearth of affordable housing -- work to increase the available stock, they only need to look as far as the courts, where thousands of units are tied up in appeal.

I would hazard a guess that the units tied up in court aren't luxury condominiums complexes like the recent project on 80 Broad St. the Mayor heralded as another step toward creating a vibrant community in the heart of the city. Those babies go for $400,000 to $2 million a pop. While the project is certainly noteworthy and will improve housing stock in the city, I can't imagine it's the type of housing that would encourage average working people to move to Boston.

The projects that might actually offer a reasonable solution to the housing crunch are the ones tied up in court -- multifamily projects and apartment complexes that are routinely tied up for years in appeal.

Greater Boston's housing issue is at the top of Brian Kavoogian's agenda as the newly appointed president of the Greater Boston Real Estate Board. Kavoogian took over the post from Dean Stratouly, president of Congress Group Ventures.

Kavoogian, a principal with The Davis Cos., said the solution to the housing crisis is production of everything from single-family to multifamily units. Trouble is, the towns where developers would like to build are running projects into the ground -- or courts -- and holding up construction through the appeals process.

Many times, opponents claim that multifamily developments unfairly burden taxpayers because added developments increase the number of children in the schools -- a statement that Kavoogian says has not been proven.

"Many towns, whether appropriate or not, attribute the fact that they oppose new housing to the cost of budgetary issues," he said.

As the new president of the GBREB, Kavoogian said supporting housing production, which includes affordable housing, will be his main focus. He plans to work with both Romney and Menino to facilitate housing construction through such means as easing zoning restrictions, providing incentives for multifamily-housing production for cities and towns and speeding up the appeals process. Kavoogian said that some 17,000 affordable-housing units are tied up in Superior Court and Housing Appeals Court dockets.

In addition to speeding up the appeals process, Kavoogian believes project opponents must be required to post significant bonds, and he's working to draft legislation mandating abutters be required to put their money where their mouth is.

William McLaughlin, senior vice president of Avalon Bay Communities Inc. in Quincy and president of the GBREB Rental Housing Association, has at least three projects tied up in court due to appeals.

"I think it will take a lot of energy," said McLaughlin about reforming the appeals process. "Yes, it's an uphill battle, but I think that there is a momentum building to make some changes."

While no one wants to take away an abutter's rights to appeal, McLaughlin believes developers could use a little more protection.

"The pendulum has swung too far in favor of those who want to slow down or stop development," he said.

Kavoogian said there are a number of measures being considered by the Legislature to improve the situation. Under one measure, the state would agree to pay for the cost of schooling children to provide towns incentive to allow multifamily units. The state would also expedite the sale of 1,000 acres of unused state land by putting it up for auction and into the hands of developers.

Moving on

Real estate research dynamo Brendan Carroll recently left Grubb & Ellis Co., where he had been since last January, to join Richards Barry Joyce & Partners LLC as the director of research.

"We've really admired his exceptional research for a real long while," said Robert Richards, principal at RBJ. "We've just identified him as someone who could make a difference with our clients."

Carroll, 29, attracted Richards' attention because he displayed passion for real estate research, which the firm hopes to make a cornerstone of its business.

The local Boston market is difficult to understand, said Carroll, and is especially important as national and international capital looks to invest in the market.

"You really have to have a bulletproof research platform," he said. "The importance of research is increasing as the players become increasingly nationalized."

Deals around town

Cushman & Wakefield of Massachusetts Inc. announced the sale of 2300 Crown Colony Drive in Quincy to REIT Management and Research for $7.7 million. Robert Griffin Jr., Edward Maher, Marci Griffith Loeber and Christopher Griffin of Cushman's financial services group represented the seller -- a fund advised by INVESCO Realty Advisors -- and found the buyer.

Richards Barry Joyce and Partners announced the recent lease of 21,550 square feet at 20 University Road in Cambridge. Gradient Corp. signed a 5 1/2-year lease at University Road and is moving from its previous corporate headquarters at 238 Main St., Cambridge. RBJ principal Jonathan M. Varholak represented the landlord, Carpenter & Co., working with Jeff McKenzie, Carpenter's executive vice president. Roy Hirshland, president and CEO of T3 Realty Advisors LLC, represented tenant Gradient.

MICHELLE HILLMAN is the real estate reporter for the Boston Business Journal. She can be reached by e-mail at mhillman@bizjournals.com

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January 5, 2004
Office Market Unlikely to See Quick Recovery
Banker & Tradesman

Following a year filled with falling office rents and climbing vacancy rates, commercial real estate industry watchers are looking toward 2004 with renewed hope. And as the year-end numbers for 2003 begin trickling in, things are already looking up for the market.

December closed on a positive note with almost every Greater Boston submarket realizing positive gains in the fourth quarter, according to data compiled by Boston-based Richards Barry Joyce & Partners. The data exhibits a marked improvement over mid-year 2003 figures, which showed increased vacancies almost across the board.

“Displaying growth, even in small increments, across so many submarkets certainly should be seen as a positive indicator,” said Robert B. Richards, president of Richards Barry Joyce & Partners. “As we head into 2004, there is reason to be optimistic from the fact that the market is gaining strength.”

According to a December report by the Conference Board, a nonprofit economic think tank based in New York City, gross domestic product growth will hit 5.7 percent in 2004, making it the best year economically in the past 20 years. Increased business and consumer spending has already generated growth across the country, and while the labor market is growing only slowly, a pickup in hiring may have already begun, according to Gail Fosler, chief economist of the Conference Board.

The organization also projects that the U.S. economy will generate more than 1 million new jobs next year while real capital spending, which rose by only 2.7 percent in 2003, will climb 11.7 percent in 2004 and an additional 8.6 percent in 2005.

If the Conference Board’s economic projections come to fruition, a recovery for the commercial real estate market, which generally lags the economy by about six months, may begin in 2004.

Signs and Portents
After three straight quarters of increasing vacancy rates, Boston’s Back Bay office market showed significant signs of improvement during the fourth quarter of 2003, with the overall vacancy rate declining to 10.74 percent. Overall vacancy in the Back Bay Class A office market decreased to 11.29 percent after hitting a two-year high of 13.16 percent in the third-quarter of 2003. The Route 128 and Interstate 495 markets experienced only modest improvements in vacancy – Route 128 fell from 21.79 percent to 21.53 percent while the Interstate 495 market decreased less than one-tenth of a point to 24.95 percent.

While the year-end numbers did show an improvement over early 2003, industry watchers are skeptical about any talk of a quick recovery.

There are some clouds ahead, said William P. Barrack, principal of the Boston office of Spaulding & Slye Colliers. The $10 billion merger of Manulife Financial Corp. and John Hancock Financial Services, which occurred shortly before the FleetBoston Financial and Bank of America merger, left questions about how the consolidations will affect the office market. It’s still unclear if, or how much, space will be shed as a result of the transactions. The mutual fund industry had a shakeup of its own – earlier this month, the state U.S. attorney’s office launched a probe into alleged trading abuses within the industry, including the Boston office of Prudential Securities.

“Absent of those three big events, 2004 would have posted gains as far as absorption and rent increases,” Barrack said. “Now it may be a flat year. The mergers will result in excess space and a dampening of [rental] rates.”

The signs at the end of 2003 point toward an uptick in the New Year. During the fourth quarter, Thomson Financial renewed its 380,950-square-foot lease with Boston Wharf Co. for 22 Thomson Place in Boston’s Fort Point Channel neighborhood and Goodwin Procter renewed its 359,453-square-foot lease at Exchange Place at 53 State St. in the Hub. Boston leasing activity also saw law Firm Nixon Peabody move to 100 Summer St., taking 167,000 square feet of office space, and PricewaterhouseCooper’s sign a 291,000-square-foot lease deal at 125 High St.

The long-term 100,000-square-foot-plus commitments marked significant movement in the large tenant sector, Barrack said.

“There were a lot of good trends starting to be established as we brought 2003 to a close. There were a lot of transactions and velocity was up,” he said. “In 2004, we expect that trend to continue.”

Now, brokers are looking to the class of tenants with leases expiring in 2005 and 2006.

“In 2004, we’re going to see a reduction in vacancy rates, albeit not dramatic,” said Joseph P. Fallon, principal of the Boston office of Trammell Crow Co. “We felt that there was a greater pulse to the marketplace. We hope that velocity of transactions will continue into 2004.”

The Route 128 office market remained active throughout 2003 and a surge in leasing activity during the fourth quarter helped reduce the overall vacancy rate to 21.53 percent from 21.79 percent in the third quarter of 2003. The Interstate 495 office market remained stable in 2003 with overall vacancy rates around 25 percent. For the fourth quarter the overall vacancy rate decreased slightly to 24.95 percent, according to research by Richards, Barry, Joyce & Partners.

“We’re going to start turning the corner in some of the markets,” said Tamie R. Thompson, principal of the Boston office of Spaulding & Slye Colliers. “We’ll be stopping the bloodbath, so to speak.”

Tenants on the move in 2004 include General Electrics Panametrics, expected to close soon on a 150,000-square-foot lease in Waltham, The Gift Center, now in Bedford, is searching for a 140,000-square-foot space, and Pearson, which is looking for 80,000 to 100,000 square feet in the central Route 128 market.

Thompson said that there are also a number of life sciences industries exploring options in the suburbs.

“We can only hope that there’s a trickle-[down] effect from Cambridge into the suburbs,” she said.

Overall, most industry watchers are optimistic that 2004 will bring at least an up-tick in the market and possibly even the first big wave of recovery.

“We’re beginning to get our footing with the economic improvements over the last 12 months,” said Jeffrey B. Swartz, principal of the Boston office of Spaulding & Slye Colliers. “Now real estate is beginning to improve. We expect that the first part of ‘04 will look like ‘03. The best real estate will maintain high values and the inferior buildings will lose value.”

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January 2, 2004
ViaCell consolidates to converted lab-office mix
Boston Business Journal

CAMBRIDGE -- The first lab deal for Equity Office Properties Trust could be the largest in Cambridge this year, with ViaCell Inc. taking 43,000 square feet of lab and office space at Cambridge Science Center.

The property, at 245 First St. in Cambridge, was formerly known as Riverview I and is being converted by Equity Office to include 130,000 square feet of lab space in addition to the 148,000 square feet of office space available in the 18-story tower formerly known as Riverview II.

An above-ground parking garage takes up the first eight-floors of the 18-story tower.

ViaCell, a cellular medicine company, has inked a 10-year deal for 25,000 square feet of lab space in the newly converted building and another 18,000 square feet of office space in the adjoining tower, which is connected by a common lobby.

The company is consolidating its operations from four locations it has currently: two in Boston, one in Cambridge and one in Worcester. Between the four locations, ViaCell is vacating 32,000 square feet and moving its Boston headquarters to 245 First St.

ViaCell is reportedly paying in the mid-$20s per square foot in the office space and the mid-$40s per square foot for the lab space.

"We're very pleased to have leased one-third of the lab building four months before it's going to be officially opening," said Bob Richards, of Richards Barry Joyce & Partners LLC.

Richards represented Equity Office in the deal, but said could he not offer details of the lease terms. Equity Office representatives were not available for comment by press time.

Trammell Crow Co. brokers Joseph Fallon, Mike Brown and Ted Lyon represented ViaCell in the deal.

The newly dubbed property is expected to be ready for occupancy in the spring of 2004, said Daniel St. Clair, director of development services for Spaulding & Slye Colliers, the development manager for the lab conversion.

The general contractor for the project is Barr & Barr Inc. of Framingham. McNamara/Salvia Inc. of Boston is handling the structural engineering. The architect is Perkins & Will of Boston.

Curtis Cole, a broker with CB Richard Ellis/Whittier Partners in Boston, said the deal represents a move in the right direction for the Cambridge lab market, which has been plagued by a considerable amount of vacant lab space. By choosing to consolidate its operations and locate in Cambridge, ViaCell, whether intentionally or not, has cast a vote of confidence in the Cambridge lab market, he said.

But with hundreds of thousands of square feet available -- and with larger pharmaceutical companies shedding space -- the deal is just one of many that need to happen for the lab market to rebound.

"The market needs to see a series of these deals," Cole said.

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