Watertown: The New Cambridge
With rents up and vacancies down in the hot Cambridge and Boston markets, the appeal of neighboring Watertown grows stronger for office users, investors, and multifamily developers. (You can't always get what you want, but if you try sometimes, you get what you need. ) “It’s a relief valve,” says Colliers EVP Jim Elcock.
With an office vacancy rate of just under 10% and few new Class-A office buildings, many Class-B and B-plus assets like the 1880 Riverbend in Watertown Square, owned by Commonwealth REIT, are fully leased, says Jim (above). Asking rents start at $27/SF and go up to the low $30/SF. In Cambridge’s popular Kendall Square submarket—home of MIT—office rents go from $45/SF to $57/SF. Watertown has a different ZIP code but has become a favored alternative to Cambridge and reflects many of the same market drivers: It has good public transit, great highway access to Boston and Cambridge, and an emerging 18-hour-day character.
Since the ‘80s, this town has been repurposing its expansive industrial and former military buildings, converting them into hip brick-and-beam space. While just down the Charles River from Harvard Square, Watertown used to feel remote. But since Harvard University purchased the 11-building, 760k SF Arsenal on the Charles (above) 15 years ago, it’s acquired an Ivy League aura that validated Watertown as a business address. By ’05, the completion of the Big Dig transportation network brought it within a 15-minute drive to Logan Airport (assuming no traffic).
Some tenants are taking space that’s been vacated by big users like Raytheon and Boston Scientific when they relocated farther west. The New England Research Institute is leaving a Watertown location it’s occupied for 20 years (most recently in 50k SF) to lease 35k SF at 480 Pleasant St (above). Like many counterparts in Cambridge and Boston’s Seaport District, NERI believes that it can do more with less in an efficient, open-plan layout featuring plenty of collaborative space, Jim says.
A year ago, AethenaHealth, a medical software company, paid Harvard $168M for Arsenal on the Charles to use as its HQ, a game changer for Watertown. As a solid, growing tech company, AethenaHealth further raises the profile of the town, and helps strengthen its brand while Aethena’s staff supports local retail, restaurants, and creates demand for residential properties. Since Athena owns and occupies the Arsenal, it’s commitment validates the neighborhood and gives other companies and developers comfort to know they aren’t pioneering. As AethenaHealth expands within the complex, it’s sending tenants out into the market generating more leasing activity, Jim tells us.
Criterion Development completed Phase 1 of the 170-unit Riverbend on the Charles last September, sited at an abandoned brick plant that created a barrier between an existing residential neighborhood and Watertown Square, a short walk away. The new project enhances pedestrian access to the restaurants, shops, and mass transit in the center and to the public riverfront. It also offers tenants the amenities of new multifamily housing recently developed in Cambridge but at lower cost. Criterion is nearing completion on Phase 2 a block away, which will feature its own ground-floor eatery.
In two weeks, right after filing taxes, apartment seekers can start signing up for the 300 units that Dallas-based Mill Creek Residential is completing a few blocks down the street toward Waltham. Amenity-rich, there’s an 8,000 SF clubhouse for the people and a spa for their pets. Not all play, it also has a business center and conference room. First occupancy is planned for June.