Needham Tries To Buck Trend Of Businesses Ditching Burbs For Boston
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Companies are flocking to Boston’s urban core, leading some to question what role the suburbs can have in the region’s building boom. But one town, which lost a high-profile company to the Seaport, is working to evade further relocation headwinds.
“There are companies that want to be in Boston that don’t want to pay Seaport prices,” N-Squared Innovation District Director Chuck Tanowitz said. “It’s an expensive way to live.”
The Newton-Needham Regional Chamber is at work repositioning 500 acres straddling the Newton-Needham border into the "N-Squared Innovation Corridor." The special district includes the Needham Crossing business park in Needham, the Wells Avenue office park in Newton and the Highland Avenue/Needham Street commercial corridor. Improved roadways and bike lanes are also part of a plan to turn the area into a walkable mixed-use Metro West commercial hub.
“Needham is a submarket on the rise,” Colliers International Director of Research Aaron Jodka said. “Amenities are increasing, and a new group of tenants are popping up like SharkNinja and NBCUniversal.”
The submarket also features office rents at a substantial discount compared to neighborhoods closer to downtown. While East Cambridge rents range from the mid-$70s/SF into the $80s and those in Back Bay are in the $60/SF range, Needham rents range from the high $30s to low $40s per SF, Jodka said.
TripAdvisor moved into a 280K SF N-Squared headquarters in 2015. SharkNinja moved into N-Squared in June with a new 175K SF headquarters, bringing 400 employees to the area and plans to add 100 more. NBC has plans nearby for a $125M regional headquarters, and town leaders point to firms like computer data storage company Kaminario as sources of future growth that look to tap into talent living closer to Route 128 than downtown.
“When you think of the suburbs overall, there’s nearly 100M SF of occupied space. While there’s migration from the suburbs, the market is not going away,” Jodka said. “Needham is getting a bigger share of the pie with the redevelopment taking place.”
But some might question if it is all for naught. Software company PTC announced in September it will ditch Needham for the Seaport, taking 1,000 employees with it and leaving a 320K SF suburban office building empty in the early part of 2019. The continued Seaport corporate migratory pattern from companies like PTC and General Electric has left suburban New England submarkets feeling like sitting ducks waiting to get poached, but Needham is not ready for its swan song.
“We actually think of it as a development opportunity,” Tanowitz said. “We don’t often have a large headquarters site readily available.”
Clarks Americas had its corporate headquarters in Newton Upper Falls for nearly 18 years before it moved to a new 120K SF headquarters in Waltham in October 2016. The shoe company wanted to stay, according to Tanowitz, and having a space like PTC’s soon-to-empty office to offer could have helped. But even he recognizes the region’s shortcomings.
“Our challenge is transportation and housing,” Tanowitz said. “We need to give people a reason to be here and show it’s vibrant and committed to the future.”
N-Squared lacks a direct rapid transit connection, which many developers see as key in luring younger talent. New Balance spent $20M to build an infill commuter rail stop on the Worcester-Framingham line at its Boston Landing development. But Needham developers see shuttles to nearby Green Line stations as a solution, similar to services offered in Burlington and Waltham to the Arlington Red Line station.
“When showing a property, it’s important to say on the front line that option exists,” The Bulfinch Cos. Senior Vice President and Director of Leasing Michael Wilcox said.
While it may not compete in the same tech circles at the Seaport or Kendall Square, Needham could emerge as a formidable southern player among the Route 128 submarkets. Some tenants already prefer it to Wellesley, and work to alleviate the notorious highway traffic will only improve access to N-Squared, according to Jodka.
“Waltham in particular is the bellwether when it comes to suburban Boston, and Burlington is a close second,” Jodka said. “There’s potential for Needham to develop a Burlington feel to it.”
It still has a game of construction catch-up before it reaches the same level as the two cities further north. Needham has 2.6M SF of office inventory compared to Waltham’s 11.6M SF and Burlington’s 7.4M SF. Bulfinch has 1M SF of development in the Needham area, and Wilcox thinks the right steps are being taken to give the town its moment.
“My career spans 18 years, and we’re still riding a nine-year expansion of the economy,” he said. “The PTC to Boston move is certainly something consistent with what others in technology are doing, but we also see where things swing back due to the benefit of being located with better opportunities to buy homes, bring up kids and good school systems.”