Office Parks in Transition: a Case Study

 

The suburban office park of 2014 is different from the suburban office park of 1990.  The same buildings may be there.  But what is going on in them is often very different.  The Wells Avenue Executive Park in Newton is a case in point. 

 

Bordered by wetlands along the Charles River and the campus of Mt. Ida College, about a mile from the Highland Avenue interchange of Route 128, the park was begun in the late 1960s and was developed in a woodsy, campus style.  It became one of Route 128’s prime office locations.  The first buildings in the park were good-quality one-story industrials.  In the 1980s, office development took over, and some of the city’s most attractive buildings, brick-clad, with windows in long bands and double-height lobbies, were installed.  Since then, the park has achieved a high level of prestige.  Office rents at Wells Avenue have been as high as any in the Route 128 corridor. 

 

But in 20 years, the world of office space has changed.  Office rents have flattened.  Much of the suburban office space that rented for $25 per foot per year in 1990 still rents for $25 today.  Meanwhile, apartment rents have soared.  Those cranes we see on the skyline, building the new buildings across Greater Boston, for the most part are building apartments, not offices.  Most new suburban offices today are unable to repay their construction costs, and that is why we don’t see them on the rise.

 

The trend to “repurposing” of office and industrial buildings at Wells Avenue and other suburban parks like it is not new.  In the past 20 years, the Wells Avenue Executive Park has seen these new uses:

 

  • the Solomon Schecter School, going into the former Jordan’s Furniture warehouse, the largest industrial building in the park

  • the Massachusetts School of Professional Psychology, taking over most of the space in the prime office building at the entrance to the park

  • the Boston Sports Club, a fitness center re-using the former industrial building at 135 Wells Avenue

  • a day care center

  • a gymnastics academy

  • a test prep school

  • an outpatient medical clinic for Newton-Wellesley Hospital, in another of the park’s large former industrial buildings

  • the most recent proposal, in late 2013, for a 350-unit apartment to take the place of the sports club

 

These are not the uses for which the park was intended.  But they are the uses it has come to.  The trend is clear: housing, schools, medical space, and recreation supplanting offices and industrials, our places of work.

 

Twenty years ago, if someone had asked an industry observer where the Wells Avenue Executive Park and office parks in general were headed, the answer would likely have been “strong growth.”  Investors invested heavily in office buildings.  But the returns have been anything but strong.

 

Take a drive through the Wells Avenue Executive Park or through any suburban office park from the 1970s or the 1980s.  The same attractive buildings, which still look modern, line the roads.  But what goes on inside their walls increasingly involves these new uses.  Along Route 495 especially, a visitor encounters large, wooded sites that were originally planned for offices.  Today those sites stand idle.  When buyers can buy 1980s-era office buildings for far less than what it would cost to build them, what is the chance that anyone will build a new office on any of those sites?  The chance is far better that, when development does come, it will be in the form of an indoor soccer field, a medical building, or a school.

 

Developers don’t sit still.  They harness change.  At the Needham Crossing Office Park just down the road from Wells Avenue, older buildings are coming down in favor of a hotel and incubator space for innovative start-ups.  In Westwood, an entire park has come down so that a modern village-style development next to the commuter rail stop can take its place.  The office park is re-inventing itself.  The change is dramatic.  And it has come about in only twenty years.

 

 

The Reenstierna Associates Report is published as a service to the clients of Eric Reenstierna Associates, LLC and other real estate professionals. The views expressed are those of the articles' authors and do not necessarily reflect those of other members of the organization. Copyright 2014. All rights reserved.

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