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Route 128 Woos With Amenities And Cheaper Rent. Is It Enough?

Developers are looking to lure companies to the suburbs from pricey Cambridge and the Seaport, but — while they are listening — these firms are not fully sold.

Route 128, “America’s Technology Highway,” ended 2016 with a 14.8% vacancy rate, but developers anticipate that number will drop once companies see the amenities, lower rents and bigger spaces this submarket offers. Cities like Burlington, Lexington and Waltham serve as a relief valve to the pricier urban core due to their proximity to Cambridge.

“We’re seeing office rates around $40/SF, which would be a dream in a place like Kendall Square,” Colliers vice president Bill Lynch said.

Route 128 has traditionally been a build-to-suit market. Clarks, Wolverine Worldwide and Thermo Fisher all opened new headquarters in Waltham last year, and construction is underway in Burlington for MilliporeSigma’s new $115M, 280k SF campus. Officials at Waltham-based Raytheon said there are no plans to expand its headquarters, but some anticipate that could change with increased defense spending under the Trump administration.

“Defense priorities seem to be coinciding with Massachusetts’s tech strengths,” said Branner Stewart, a senior research manager at the UMass Donahue Institute. “As the U.S. emphasizes that, there is going to be more support for R&D facilities.”

Courtesy of National Development

Rehabilitation and speculative building has not happened much along Route 128 until recently. National Development purchased New England Executive Park in Burlington in 2013 and repurposed the campus under a new moniker, the District. Intent on making the area relevant for young employees and poach business from places like Cambridge, developers have injected 160k SF of restaurants and a hotel.

“Compared to the rest of the country, anywhere inside 128 can be considered within city limits,” said National Development managing partner Ted Tye, referencing Boston proper’s small size. “We’ve focused on creating these strong suburban campuses that are basically part of the city and can provide areas that the urban core can’t.”

National Development has also added a farmers market, shuttle service to the Alewife Red Line station and events like movie nights to give tenants a suburban and urban hybrid lifestyle. Companies have taken note and are biting — but still keeping a city presence.

Courtesy of National Development

Despite Microsoft moving some employees to Burlington offices it gained through its Nokia acquisition, it still renovated and retained 150k SF in Kendall Square. Shire Pharmaceuticals, the state’s second-largest biopharmaceutical employer, has 2,300 employees at a large office and R&D campus in Lexington, but it is building out a 550k SF campus on Kendall Street in Cambridge.

“We’re seeing companies want a Cambridge or Seaport outpost but also retain a large presence in the suburbs,” Colliers director of research Aaron Jodka said. “It’s so they can cast a wider range of suburban and city talent.”

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