Cisco currently leases over 700,000 sf of space in this town and in Lowell. The San Francisco, California-based networking giant is in the process of developing a campus in Boxborough and according to Mojgan Khalili, a spokesperson for the company, the company is starting to put some of its space on the market as "part of our consolidation efforts" to move to the new campus.

The campus was the subject of much speculation because Cisco put the project on hold last year but Khalili says the company is now building three buildings for a total of 450,000 sf of space and has permits to build another 450,000 sf on the site.

"Everyone knew this was going to happen," stresses John Wilson, a partner at Richards, Barry & Joyce who specializes in the Route 495/North market, referring to the space the company put on the market. "Now its official. It just confirms that this is a tenant's market." Cisco put a 144,000-sf building at 250 Apollo Drive and a 304,000-sf building at 300 Apollo Drive up for rent. Recently, Cisco put a 130,000-sf space at Crosspoint in Lowell on the market, says Wilson, who notes that the company put a 55,000-sf space at 41 Wellman St. in Lowell on the market 15 months ago.

"We've known for a while that Cisco would vacate these buildings," Wilson tells GlobeSt.com. ""It's not a big shock to the real estate community." Wilson doesn't believe that the excess space will impact rental rates--yet. "When everyone thought about how to price things, they priced it knowing about this space," he says. "But if Cisco decides to price it low then it could have an impact on the market."

Cisco is currently asking for $15 per sf, which Wilson points out is market rate. But the key to the deal is that these are subleases with not a great deal of term left. 250 Apollo expires in January, 2007, 300 Apollo and 41 Wellman expire in May 2005, and Crosspoint expires in December 2006. "When you don't have a lot of term to offer tenants it could be a disadvantage because then you need the landlord's cooperation," says Wilson. "These are all excellent buildings but subleases could take two parties to make the transaction happen, and the landlord isn't as motivated to get the space filled. He might want to ride it out. You have to wonder if the landlord will want to cooperate with a credit tenant like Cisco. It will be interesting to see what happens."

Wilson points out that the reality of the marketplace is that over half the vacancies now are sublease space in this area but if a tenant can be offered good term there is activity on the property. Wilson notes that his firm has a sublease for 260,000-sf of space that Tellabs is looking to fill. "We can offer up to nine years and we're seeing good activity," he says.

"But the big question," adds Wilson," is will Cisco get aggressive on the pricing?" He says that a landlord will be unlikely to add on term if it is priced too low. But, it is hard to know what the situation will be down the road. "In a year from now, Cisco could vacate and there are no tenants," he says. "Then who knows?"