The next frontier for housing: Suburban office parks

Boston Globe

14-02-2025

The
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Indeed, Jeremy A. Freid, senior partner at Newton-based commercial brokerage 128 CRE, said many property owners in Boston's suburbs are examining their holdings to see whether demolishing them and building multifamily housing makes sense. In an ongoing post-Covid shakeout, suburban office has been hit hard; along Route 128 and 495, more than 2 million square feet of office space has been emptied in the last year alone, according to real estate firm Newmark. Demand for housing, meanwhile, remains robust.
'That seems to be the one asset class that is somewhat recession-proof and can navigate through all these cycles,' Freid said.
While
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Many still hold out hope for
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'There's office parks that have a tremendous amount of land and low density, and you've got all these empty parking fields,' Koop said. 'We absolutely see the opportunity.'
Much of Greater Boston's suburban office stock is considered functionally obsolete — not in demand by tenants, too dated to warrant meaningful investment in modernizing. For many suburban offices, tenants that have been in place for decades have either downsized or left entirely. Some 23 percent of office space was available to lease at the end of the year, according to research from brokerage Colliers, the highest rate in more than 20 years.
Of course, building new housing, especially apartments, can be a tough sell in many communities. Existing homeowners and residents often push back against any residential proposals, with fears of overrun schools and overflowing sewer lines, or
more cars on the streets.
Some towns and cities are loath to give up the real estate tax that comes from commercial properties, which are typically taxed at a higher rate than residential. But for a 50-year-old office that has nobody knocking on its door to lease — and with expensive upgrades to building systems that would be necessary to even get a tenant in the door — it's likely that the property's assessed value would decline, ultimately meaning less in tax revenue for the town, said Nick Trocki, senior vice president with Quincy-based Jumbo Capital Inc.
'Our goal is to be able to work with those towns to help them recognize that, but also be able to recoup some of those lost assessed values and real estate tax income,' Trocki said.
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A rendering of the five-story apartment building BXP wants to build at 17 Hartwell Ave. in Lexington.
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Trocki has pitched many suburban communities about allowing different real estate uses at what are now vacant commercial offices and empty parking lots. He sees opportunity for more multifamily residential development but acknowledges that changing zoning will take time.
'It's certainly town by town,' Trocki said, adding that there's a surfeit of underutilized commercial property in the suburbs. 'Why wouldn't you allow these overlays to go on top of them?'
Developers and others looking for redevelopment opportunity will also find a much less expensive buying environment than the past several years, when the office-to-lab conversion boom inflated the prices of suburban offices.
By the end of last year, the average price per square foot for suburban office sales dropped to $124 — less than the average per-square-foot price of $136 reached nearly two decades ago, in the final quarter of 2005,
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Most of the time, repurposing suburban offices would mean razing the buildings and starting with a flat site. Such projects come with a number of logistical challenges of their own, said Ryan McDonough, chief investment officer at Boston-based
real estate firm Marcus Partners.
'You have to understand the site,' McDonough said. 'Is it flat? Is it large enough to accommodate the use you want to put together there?'
Both industrial and multifamily uses need more land to spread out on than a traditional office footprint. Zoning is often the most challenging component.
Many office building sites do not allow for housing, and convincing
communities to change the rules can be a tough sell.
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That challenge was clear for Cabot, Cabot & Forbes, a Boston-based real estate development firm that has pursued multifamily projects in areas the firm thought would comply with the MBTA Communities Act. Chief executive Jay Doherty said the firm has had to cancel some 800 units in communities like Natick, Waltham, and Littleton — at a cost of about $600,000 in predevelopment deposits and design
— after the communities 'did not zone near the MBTA stations, or at least did not zone in a way that was useful or feasible for actual development.'
In some areas — like the Hartwell Avenue properties in Lexington — there are low-rise office buildings or
research and development buildings that would make good candidates for multifamily development, Doherty said — if they can be zoned.
'If they're old enough, and well located, and zoned,' Doherty said. 'If the zoning — particularly MBTA zoning — permits residential development, I can guarantee you someone is going to try it. But there are so few sites.'
Catherine Carlock can be reached at