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CHELMSFORD, MA-There is a bit of unwanted deja vu for landlords in the Interstate 495 North office submarket, but tenants are expected to react favorably to a turnkey sublease opportunity being introduced by Kronos Inc. A major employer in the area that has operations in five locations, Kronos no longer has need for 300 Billerica Rd., a two-story, 111,000-sf building just off Route 3 at Exit 29.

“This is a very unique opportunity,” relays DTZ FHO Partners principal John Boyle, who has been retained by Kronos to find a taker. At its bargain-basement rate of $7 per sf and a term that lasts until late 2012, Boyle expresses confidence that the property will generate interest. “It’s a beautiful building,” says the broker, who is handling the assignment with colleagues Michael Dalton and Michael O’Leary.

Approximately $4 million has been spent upgrading 300 Billerica Rd., Boyle says, adding he expects tenants will be attracted by the quality furniture being left behind, a modern phone system and full-service cafeteria. The building also has a top-flight steward in Boston Properties, notes Boyle, who says the landlord has expressed interest in striking a longer-term lease with the eventual subtenant.

Boyle and officials at Kronos stress that the sublease of 300 Billerica Rd. is not a signal of distress for the company. In a statement, Kronos says that none of the buildings it occupies were being fully utilized. The consolidation down from 460,000 sf will better align the needs of its workforce, company officials explain, while Boyle says the pro-active approach allows the firm to take advantage of a favorable lease struck at 300 Billerica Rd. “Kronos continues to thrive,” the firm says in the statement, pointing out that it is in an active hiring phase despite already being one of the largest employers in I-495 and among the five largest software developers in Massachusetts.

“It’s a great company,” says Boyle. As for the impact on I-495′s office market, Boyle declined comment, but some industry observers maintain the sublease is a bit unsettling. The $7 per sf rent is well below the $23 per sf average rate for I-495 office space estimated in the year-end 2007 DTZ FHO Partners market report. The submarket of 9.4 million sf tracked by DTZ FHO has a vacancy of 19.1%, a rate that is high but far below the 30% range recorded earlier this decade after the brutal recession that began in mid-2001. That crash of the technology sector decimated I-495 North for several years, pitting building owners up against numerous subleasing opportunities that were offered by cash-strapped tenants.

I-495 North enjoyed 717,000 sf of net positive absorption last year, says DTZ FHO Partners, and a total lack of new construction has made conditions even tighter. But while the Kronos turnkey is apparently not a result of financial trouble at that firm, some observers say they fear the shaky economy could lead to a return of subleasing competition for local landlords. “You really have to question how many more of these are out there,” says one broker.

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