BOSTON BUSINESS JOURNAL – Critics generally take one of two narrative tracks after a story has been published: either I have a vendetta against this or that institution, or I am carrying someone else’s water. Sometimes it’s both.
Such is the life of a journalist. But nothing of the sort applies to today’s opus. This is simply one guy’s marvel over the commercial real estate revival underway in the city of Marlborough. In short, it’s a beautiful thing.
This is not to say Marlborough is a beautiful place. Marlborough is still Marlborough, the unkempt big brother among a cluster of wealthier and far more self conscious towns in MetroWest. No doubt it is still the only member of the group with a gun shop on Main Street.
But that’s beside the point. What’s happening now in Marlborough is nothing short of a comeback story, one that’s still being written. This week’s big news saw GE Healthcare confirm — no thanks to our esteemed friends at CBRE — that it is moving its U.S. headquarters to a 160,000-square-foot space at 200 Forest St. That’s the same 200 Forest St. where Quest Diagnostics inked a deal for a 200,000-square-foot chunk of space in 2012.
Kudos to Atlantic Management of Framingham for leasing the you-know-what out of the 750,000-square-foot former Hewlett-Packard campus, which it bought for all of $9 million, or $12 per square foot, in 2011. But its success in landing GE and Quest is just the tip of the iceberg in Marlborough.
To get a flavor for just how far Marlborough has come, consider that at the end of 2010 around 50 percent of the city’s office and R&D space was either empty or about to be emptied. Marlborough was getting crushed, and it was threatening to bring the entire region down with it.
Maybe that’s an exaggeration. But maybe not. With 5.6 million square feet of leasable space, the city is the single largest office and R&D market in MetroWest, according to data provided by Cassidy Turley. Its problems are everyone else’s problems.
But that’s all a distant memory. Today Marlborough is hot.
What changed? For one, rents took a nose dive, and big tenants got wise to the value of moving in where others were moving out. And the infrastructure was there. And the access to highways and virtually every major city in New England was there. And perhaps most important of all, the desire within City Hall to turn things around was there.
To be sure, tax incentives have played a huge role in Marlborough’s revival. Last year the city’s big tax beneficiaries were Boston Scientific, Quest and The TJX Cos. This year it’s been SanDisk and is likely to include two yet-to-be-announced major tenants that real estate sources say are expected refurbish a combined 250,000 square feet of space in the months ahead. No doubt GE Healthcare will look to similar tax-increment financing deals when it comes to building out its new space.
Regardless, the extra carrots are having their intended effect. In 2013, Marlborough recorded 374 commercial building permits calling for some $100 million in new construction and improvements. That was more than double 2012’s numbers (184 permits, $41 million in value) and roughly eight times the $13.4 million in commercial building permits granted in 2011.
Bradford Dunn, Marlborough’s principal assessor, says the influx of tenants and redevelopment have fed a virtuous cycle of reinvestment and rising property values citywide, which in turn are spurring tax revenue and investment in local services. All of which is strengthening the pitch to lure additional major tenants to the market.
“It’s been dramatic and fantastic,” Dunn said of Marlborough’s ongoing reversal of fortune. “I wish I could take credit for it, but it’s been nice to be a part of, to see it grow.”
Marlborough still has some work ahead before it can say it is on strong footing, but the wind is at its back. As of June 30, the city’s commercial vacancy rate was around 30 percent and its average annual office rents were around $20 per square foot — still far from the nosebleed pricing in Cambridge’s Kendall Squall and Boston’s Back Bay, but it’s an improvement. The addition of major life sciences companies such as BSX, Quest and now GE Healthcare will only add to the region’s draw, especially when compared to the pricier options in the city.
The smart money says Marlborough’s fortunes will continue to change for the better before the year is out.
This article by Craig Douglas originally appeared here.