Waltham is the hottest office market in the state outside of Boston and Cambridge, leading a surge in corporate real estate activity along the Route 128 corridor, according to a new report. But Burlington and Newton are not too far behind.
Priced out of Cambridge’s Kendall Square and Boston’s Innovation District, fast-growing tech and life science companies are fueling the demand for suburban space as they ramp up hiring, say authors of the study by NAI Hunneman Commercial Real Estate Services.
“There is a desire to escape a real frenzy of demand in Boston and Cambridge,” said Brendan Daly, an NAI Hunneman vice president who worked on the report.
More leases for office space were inked in Waltham during the second quarter than in any other Greater Boston community, according to the study. There were 124 deals signed during April, May, and June.
Second up were Burlington and Newton, tied at 71 lease deals each, followed by 43 deals in Woburn, 42 in Needham, and 21 in Lexington, the Boston-based firm reported.
In Waltham, office space deals ranged from Compuware Corp.’s 68,000-square-foot lease at 404 Lyman St. to Creativestar Solution’s deal for 3,000 square feet at 460 Totten Pond Road.
The list of new arrivals also included IntelligentMDx, an up-and-coming life science company and a refugee from the ever more expensive Cambridge office market. The company recently leased 27,000 square feet at 285 Bear Hill Road in Waltham, Daly said.
In Burlington, companies that signed office space deals in the second quarter include Foliage Inc., a technology consulting operation that took 60,000 square feet at 10 and 20 North Ave., and Marine Polymer Technologies, which leased 6,550 square feet at One Van de Graaf.
Also heading to Burlington were Flexion Therapeutics, which moved into 11,754 square feet of space at 10 Mall Road, and TFS Energy, with a lease for 2,205 square feet at 25 Mall Road.
Kendra Moore, chief executive of high-tech defense contractor Boston Fusion, said she chose Burlington over Waltham because of price. Her company would have paid $5 to $10 more per square foot for space in Waltham.
“It was a price-quality trade-off,” she said.
Marine Polymer Technologies opted to stay in Burlington because it was a convenient commute for the owners and other employees, said Pat Ventura, contract executive. Plus, the local restaurant and retail options can’t be beat.
“There are a lot of places to go to eat — we don’t ever have to worry about getting hungry,” she said.
So what’s cooking in Waltham? Certainly the office rents are lower — in some cases by nearly half — than in Cambridge around MIT.
Office space in one of Waltham’s big office parks overlooking Route 128 now averages $28.73 per square foot, compared with roughly $52 a square foot in Cambridge and $43.26 in Boston, according to NAI Hunneman.
There’s also more space available. Roughly 12.2 percent of Waltham’s best office space, known as Class A, is available for rent, compared with 9.1 percent in Boston and 10.6 percent in Cambridge, the firm reports.
And Waltham’s appeal to young tech and life science companies may only grow in the months and years ahead, thanks to the extreme makeover of one of the corridor’s top office addresses, Bay Colony Corporate Center.
Best known locally as owner of the Prudential and Hancock towers, Boston Properties paid $185 million in 2010 to acquire the 1 million-square-foot office complex overlooking Route 128, with views of the Boston skyline.
It was a relative bargain: The New York real estate investment firm Broadway Partners paid more than $366 million for it in 2007, before losing it to its lender after the recession hit.
But the prominent Waltham corporate address was in need of a reboot after losing some key tenants during the recession. Boston Properties has spent millions of dollars over the past couple years on renovations aimed at making Bay Colony more appealing to fast-growing, entrepreneurial operations, NAI Hunneman’s Daly said. The stodgy lobby areas are being transformed into common areas outfitted with stylish new furniture designed to be conducive to impromptu meetings, Daly said.
There is also a “fire pit” outside one of the buildings in the Bay Colony complex that can be used for outdoor events, while a state-of-the-art fitness center offers a range of activities and classes, he said.
The cafeteria has also been upgraded, with more gourmet food offerings. There are even plans for a wine and cigar bar, Daly said.
So far, the investment appears to be paying off. Empty space at Bay Colony has shrunk from a high of 38 percent in 2011 to 28 percent at the end of last month, helped in part by a pair of recent lease deals.
“For a few years the property fell into disrepair,” noted Michael McCarthy, a vice president at NAI Hunneman. “Now that Boston Properties has stepped in, there has been a lot more activity in the park.”
Monica Tibbits, executive director of the 128 Business Council, has noticed the difference. Her organization, which shuttles commuters between Alewife Station and office parks along 128, has seen an increase in commuters going to work at tech and life science firms in Waltham.
“The Bay Colony rehab was really important” for boosting activity, she said. “Before Boston Properties took over, it wasn’t at the levels that it is at now.”
Of course, it’s not all about Waltham, with Route 128 and even Route 2 emerging as alternatives for companies squeezed out of Boston and Cambridge, NAI Hunneman’s McCarthy notes.
Moreover, Burlington has also emerged as a favorite 128 location for growing young companies, with the town’s array of retail and restaurant options a real draw, said David Begelfer, chief executive of NAIOP Massachusetts, a trade group that represents developers across the state.
“Boston and Cambridge get a lot of the press, but they are more than holding their own on the 128 belt,” he said.