Calls to California-based Koll Bren were not returned, but Insignia/ESG has been retained to market the building, acknowledges principal Stephen J. Murphy. He believes a spike in rental rates, coupled with a lack of supply, makes construction of new office product in the area a viable notion.
"It's on fire right now," says Murphy. "That market has absolutely skyrocketed in rental rates and activity, and it just keeps going… We're very excited about the new building."
Murphy estimates that Boxborough and surrounding communities such as Littleton, Westford and Acton have seen rents grow from $13 per sf at the beginning of the year to $18 per sf now. Insignia anticipates that rates will be in the $22 per sf range by the first quarter of 2001.
Broker Scott R. Hughes agrees that the Boxborough commercial market has matured since the 1980s, when Digital Equipment Corp. and a few others dominated it. Today, developers such as Koll Bren and Carruth Capital have stepped into the breach in an effort to ride the upside. "Right now, it's wonderful to be an owner in the Metrowest market," says Hughes. "We clearly don't have enough supply." Leasing activity in an existing building on the site, a former 3Com property that Insignia/ESG sold to the real estate firm last year, encouraged Koll Bren. That 150,000-sf building is fully leased to such firms as Packard Bell, NEC, Nortel Networks and Appian Communications. One key advantage of the property, Murphy says, is its location right on Route 2, which leads directly into Cambridge.
The Boston/Cambridge markets are about 40 minutes away, Murphy estimates, and the New Hampshire labor force is also nearby. In addition, many engineers and high-tech specialists remain in the Metrowest area from the Digital days.
The Koll Bren project will be unique in that it is one of the rare cases of new construction in the market, with previous deals occurring mostly in second-generation space. In one recent purchase, for example, Murphy brokered the sale of 1414 Main St. in Boxborough to Cisco Systems. The company plans to retrofit the 276,000-sf structure for its own use. Cisco acquired the property for $22.5 million from NEC.
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