Federal Realty is marketing a 250,000-square-foot build-to-suit office building at 455 Grand Union Boulevard in Somerville, part of an additional 1.5 million square feet of office and lab space available at the 45-acre Assembly Row.
First came the outlet stores and apartments. Then a 107-unit condo tower that’s virtually sold-out five months ahead of completion, with average prices topping $850 per square foot.
The next act for Federal Realty Investment Trust’s Assembly Row in Somerville: a 155-room hotel and up to 1.5 million square feet of office space.
On an adjacent parcel, a potential change of ownership could bring competition to Assembly Row. Real estate sources say Boston-based Novaya Ventures and Cresset Group have agreed to acquire the 9-acre parcel on Middlesex Avenue from longtime owner RD Management of New York. RD Management submitted plans to state regulators in 2016 for a 1.9-million-square-foot commercial and residential project, including a pair of commercial towers.
The future of both properties will be a proving ground for Somerville’s potential emergence as a major job center, after having added 4,200 Partners HealthCare employees at the company’s year-old Assembly Row headquarters over the past year.
Laying The Groundwork For Commercial Tenants
Office development kicked off in Assembly Row’s first phase with a 100,000-square-foot building on Artisan Way, which is now 100-percent leased to four tech companies that relocated from Cambridge and the northern suburbs. Partners HealthCare consolidated more than a dozen local office locations in a new 825,000-square-foot headquarters for 4,200 employees.
The time is right to pitch Somerville as a landing spot for more major employers, said Don Briggs, executive vice president for Assembly Row master developer Federal Realty Investment Trust. The Rockville, Maryland-based REIT is marketing five building sites totaling 1.5 million square feet, including a 12-story, 250,000-square-foot office building that could be under way within six months of a build-to-suit agreement.
But for Assembly Row to attract office tenants, it first had to build a 24-7 environment, Briggs said.
“The audience that needs to see it in three dimensions is the commercial real estate market,” he said. “Neighborhoods need time to mature. Now that neighborhood is in full stride, they’ll be able to see the parcels we have left and how they fit into the neighborhood, and we’ll be able to capture those office and tech tenants.”
Pricing on the build-to-suit offices will be competitive with new developments on Route 128, said Ben Coffin, an executive vice president for JLL which is marketing the sites on behalf of Federal Realty. The brokerage also has had discussions with multiple lab users for one of the other four parcels, where Federal Realty has flexibility to accommodate buildings ranging from 150,000 to 400,000 square feet.
“With how crazy pricing has become in Kendall Square, it’s at a tipping point and there’s got to be a relief valve,” Coffin said.
Assembly Row closely mirrors the selling points of another large-scale development steadily being built out on the edge of Boston. NB Development’s Boston Landing last week announced its first two life science leases in the 246,405-square-foot 80 Guest St., and it’s marketing a 320,000-square-feet build-to-suit office and lab building. Like Assembly Row, where a new MBTA Orange Line station was completed in 2014, Boston Landing offers its own car-free commuting option with last May’s addition of a commuter rail station on the Framingham-Worcester line. Both sites also have corporate branding opportunities because of their proximity to interstate highways.
More Condos And Apartments Hit The Market
Move-ins began in mid-September at Assembly Row for the 447-unit Montaje, a 20-story luxury apartment tower equipped with now-ubiquitous amenities such as a roof deck, grilling stations and outdoor fireplace. A 107-unit condo tower, The Alloy, has all but one unit under agreement in advance of its estimated March 2018 opening with average prices topping $850 per square foot, Briggs said.
Federal Realty’s Assembly Marketplace, a retail power center that it acquired with the rest of the property during the recession, recently added a Trader Joe’s and will replace the departed Sports Authority with a store by Burlington, the retailer previously known as Burlington Coat Factory. A bigger redevelopment opportunity could await if the property’s Kmart store joins the ranks of the struggling retailer’s future closure list.
“We’ve always looked at that parcel as being part of Assembly Row, and over time we’ll reposition parts of that or all of it over time,” Briggs said.
Big changes including a substantial office or lab component also could be in store for the adjacent 9-acre parcel owned by RD Management. The site contains a 195,000-square-foot office building and large parking lot.
The New York developer which specializes in retail properties submitted plans in September 2016 for a 1.9-million-square-foot mixed-use development including two commercial buildings, a 188-room hotel and two apartment buildings.
No additional state or local permitting activity has taken place since then, but real estate sources say the property is currently under agreement to be acquired by Boston-based Novaya Ventures and Cresset Group. Novaya and Cresset were not immediately available for comment.
