Acquired last year by Essex River Ventures and the Praedium Group for $35 million, Lexington Corporate Center has seen more than 100,000 square feet of leasing activity recently, opening 2005 on a strong note.
Providing a measure of stability to the MetroWest office market, financial services data firm PFPC Inc. has opted to stay put at 4400 Computer Drive in Westborough, according to real estate sources. The deal represents a coup for landlord Carruth Capital LLC after the building’s anchor tenant had scoured the region pursuing other alternatives for nearly two years, with some sources claiming the massive space requirement ultimately limited PFPC’s choices.
“They were pretty restricted” in their choices, said one industry observer, even in a suburban market still sporting substantial office vacancy rates. Estimates put PFPC’s needs as high as 340,000 square feet. Although a few nearby properties such as 334 South St. in Shrewsbury do have large contiguous blocks of space available, those options apparently did not meet PFPC’s criteria. The firm’s roots at 4400 Computer Drive date back to 1996, initially as First Data Investors Services, which PNC Bank of Pittsburgh acquired in 1999.
While the reported extension at 4400 Computer Drive does eliminate the biggest office leasing requirement in the MetroWest, Greater Boston’s recovering economy appears to be helping landlords fill space, as witnessed by a slew of deals completed recently at Lexington Corporate Center in Lexington. Acquired last year by Essex River Ventures and the Praedium Group for $35 million, Lexington Corporate Center has inked more than 100,000 square feet of leases to open 2005 in a flourish. The landlord was represented by Richards Barry Joyce & Partners principal Jonathan Varholak and Associate Ron Friedman.
Headlined by a 34,000-square-foot renewal and expansion with STMicroelectronics, RBJ has negotiated six deals overall for Essex and Praedium, including 20,000-square-foot renewals with tenants MarketSoft and AHA Consulting Engineers. Imprivata Inc. expanded to 13,000 square feet, AccuRev Inc. leased more than 7,000 square feet and Service Integrity signed on for more than 6,000 square feet.
“Lexington Corporate Center has gained a reputation as a suburban park where companies can grow, as well as a good relocation option for companies seeking to improve their image and flexibility as their business evolves,” Varholak said last week upon announcing the six transactions. Besides praising the leasing team, Essex River President John Fenton said the transaction velocity represents a hands-on approach to the four-building complex, including a willingness to work with existing tenants and prospects by being flexible in build-out and lease terms.
“By doing so, we’ve taken a property that faced many leasing challenges, stabilized its operations and converted it into a sought-after asset,” said Fenton. STMicroelectronics Office Manager Richard Couture said his firm conducted a “comprehensive search” of the office market and determined that the best choice was to remain at Lexington Corporate Center. “Our new landlord Â… was aggressive in securing a deal with ST and then working closely with our architect and project manager to facilitate a phased upgrade of our space,” Couture said in a release announcing his firm’s decision to remain.
Price Arbitration
According to RBJ, other draws at Lexington Corporate Center are a core location and quick access to Route 128, plus the park-like atmosphere of the 20-acre property. Other features include a cafe, exercise facility and proximity to retail centers and hotels. The 285,000-square-foot complex at 10 Maguire Road still can accommodate users needing 5,000 to 100,000 square feet of space, noted RBJ officials. In the completed leases, the Nordblom Co. represented AHA Consulting Engineers, while T3 Realty Advisors negotiated on behalf of Imprivata and Service Integrity. The Staubach Cos. brokered the STMicroelectronics deal for the tenant.
The successes at Lexington Corporate Center help close out an impressive first quarter for suburban Boston’s office market, with RBJ Director of Research Brendan Carroll reporting last week that the sector enjoyed 575,000 square feet of net absorption in the opening three months of 2005. The vacancy rate dipped slightly from 22.6 percent at year-end 2004 to 22.2 percent, RBJ estimates, yielding the fifth straight quarter of positive absorption after eight consecutive quarters posting negative absorption.
As for 4400 Computer Drive, PFPC Inc. has been represented in its space search by John Hennessey, a principal with GVA Thompson Doyle Hennessey & Stevens. Hennessey did not return phone calls by Banker & Tradesman’s press deadline last week, while Carruth Capital and PFPC officials also did not respond to inquiries. On Carruth Capital’s Web site, however, 4400 Computer Drive is listed as having no space available, compared to late last month when the firm was advertising 305,000 square feet available with an asking rent of $11 per square foot. Built in 1978, 4400 Computer Drive contains 680,000 square feet overall.
One rumor circulating last week related to the PFPC deal was that the rental rate for the lease extension might have to be established via arbitration. “It does look like it’s headed that way,” concurred a source familiar with the recent negotiations who maintained that the lease option provided for such a scenario if the two sides could not agree on a rental rate. Such a process is not uncommon, explained the source, with arbitration increasingly the preferred manner to settle such disputes.
Joe Clements may be reached at jclements@thewarrengroup.com.
