Developer to Launch Class A Office Project

Emboldened by skyrocketing rental rates in the suburban Boston market, the Nelson Cos. is pushing ahead with a 200,000-sf office building at the 250-acre Prospect Hill Executive Office Park, company officials say. “We are within a matter of a few days of finalizing the joint venture and financing agreement,” says Nelson president William R. Hassett. “It looks like it’s a go.”

Adding to Hassett’s optimism is the interest surrounding the property, with pre-marketing already leading to one tenant that he says is about to commit to half of the space. Hassett would not identify the company, but says it is a solid firm that will lend “great credibility” to the project. Other substantially sized tenants are also circling the site, he says, so much so that he adds, “I’d be surprised if the initial leaseup has more than three or four tenants.”

Broker John R. Linnell of Jones Lang LaSalle says he is not surprised by the momentum for the project at 77 Fourth Ave. Besides solid visibility along Route 128, the building is in the suburb’s most coveted location, one that is now bringing rents in the $60 per sf range. It was in the low $50s in January. “In Waltham, if anybody had the steel up, it would already be pre-leased,” he notes

Hassett calls the rent escalation this year “scary,” with his firm initially projecting that it would see rents in the $40 per sf range but now predicting that they will go to $50 per sf minimum. He attributes the hike to the lack of available space, as well as Waltham’s stature as an office destination.

“If people want to be in the area where all the excitement is, they are usually willing to pay the difference,” he says. According to Spaulding & Slye, the vacancy rate in the Route 128/Mass Pike market is 3.6%, down from 5.7% at the same time last year. Average rental rates for the market have leapt dramatically since mid-1999, from $27.04 per sf to $36.22 per sf.

Designed by Peterson/Griffin Architects of Waltham, the building will feature polished granite and mirrored glass from its perch atop Prospect Hill.