Westwood Station could ignite office space demand south of Boston
Real estate experts predict that construction of the $1.5 billion Westwood Station project will stir up more demand for office space south of Boston.
The Dedham-Westwood area has some of the area’s highest asking office rents, with landlords counting on shops and restaurants at Westwood Station to perk up interest among office tenants.
‘‘It becomes a real problem when you have to compete for talent,’’ said Brendan Carroll, director of research at Richards Barry Joyce & Partners in Boston. ‘‘They’re looking for nicer office space with amenities that their employees would want.’’
Site work began late last year on the 4.5-million-square-foot mixed-use project, which will include housing, offices, restaurants and stores. Built on the former University Avenue industrial park, Westwood Station is being developed by Boston-based Cabot, Cabot & Forbes of New England, New England Development of Newton and Commonfund Realty of Wilton, Conn.
William Bailey, a managing director with the Boston office of real estate brokerage Jones Lang LaSalle, said asking rents in the Dedham and Westwood section of Route 128 are the highest in the south market.
‘‘The bright spot off on the horizon is Westwood Station,’’ Bailey said.
Likewise, J.P. Plunkett, a senior director at Cushman & Wakefield’s Boston office, sees demand rising in the Route 3 corridor because of new retail and mixed-use projects such as Derby Street Shoppes and the Hingham Shipyard redevelopment.
‘‘A lot of high net worth individuals want to do business with service providers that have a Hingham address,’’ Plunkett said.
The growth spurt could wake up a local commercial real estate market that was in the doldrums for much of 2007. Office occupancy rates and rents were stagnant during the fourth quarter of 2007, according to industry reports.
Average asking office rents in the south market rose from $20.39 per square foot at the end of September to $20.51 at the end of the year, according to Jones Lang LaSalle.
The vacancy rate fell to 16 percent at year’s end, down from 18.1 percent at the end of September.
There were few blockbuster deals during the quarter in the region. The two biggest were the May Institute’s lease of 48,100 square feet in Randolph’s Pacella Park and Travelers’ lease of 39,000 square feet at 350 Granite St. in Braintree.
There are now 13 prospective tenants seeking 376,000 square feet of office space south of Boston, according to Cushman & Wakefield research.
Local office buildings now offer unusually steep discounts compared with competitors on the central portion of Route 128. The premium on asking rents in the MetroWest market over the south market has risen from 9 percent in the fourth quarter of 2004 to 53 percent at the end of 2007, according to Richards Barry Joyce & Partners.
‘‘The outlook is good for Quincy and Braintree because they offer a compelling pricing advantage over other suburban markets,’’ Carroll said.
In a favorable job market, companies feel compelled to find office space that’s appealing to job candidates, Carroll said. Office space in Burlington became more desirable after the Wayside Commons lifestyle center opened in 2006, he said. The same could hold true for offices near Westwood Station, the first phase of which is scheduled to open in fall 2009.
But Bailey predicted modest rent increases in 2008.
‘‘We could have another flat year for absorption and it really will be a factor of what the financial services and insurance industries do, because they really drive that south market more than high-tech does,’’ he said.
Steve Adams may be reached at email@example.com.
The Patriot Ledger