Chelmsford is promoting its commercial corridor as The Cross Roads at 129 to draw attention to its flexible zoning for retail, multifamily and hotel development.

Well-situated Route 128 communities such as Burlington, Needham and Waltham have resuscitated moribund office parks with multifamily housing, restaurants and retail, enhancing their appeal to corporate employers tempted by downtown options. 

Can towns along the Interstate 495 belt duplicate their success? Or do outer-ring suburbs need a different approach to maximize 21st century real estate patterns? 

A test case is playing out in Chelmsford. Two years ago, the town rezoned more than 600 acres off Route 3 with the goal of cutting office vacancies and encouraging mixed-use conversions similar to The District and 3rd Avenue in Burlington. 

After Zoning Changes, Waiting 

Since then, vacancies in Chelmsford’s 6 million-square-foot office market have declined from 47 percent to 32 percent, according to research by Colliers International in Boston. New landlords have filled some of the low-rise office buildings on Route 129 with firms in robotics, biotech, and financial services, along with nonprofits and public agencies. 

But transformative projects have failed to materialize. The new owners of a key parcel near the Route 3 interchange are taking a conservative approach, attempting to lease vacant office space before exploring additional development. And commercial brokers say there’s more demand for flex industrial space than traditional office uses in Chelmsford. That puts the responsibility on landlords to invest in retrofits despite the lower rent structures in outer suburbs. 

“The town has really done as much as they can do as far as rezoning and making it easy for companies,” said Greg Klemmer, an executive vice president at Colliers who specializes in suburban leasing. “They can’t create industries or create demand. They just have to be positioned in the right way when demand comes.” 

Now it’s the state’s turn. The Baker administration last year awarded a $90,000 grant to Chelmsford as part of MassDevelopment’s site readiness program. Chelmsford is using the money to pay for a real estate market analysis by Boston-based Camoin Assoc. and to hire a new economic development coordinator, Lisa Marrone. 

Marrone is overseeing a branding campaign for the Route 129 corridor, including development of promotional videos, a web site and logo to promote the Chelmsford Cross/Roads at Route 129 region. 

A Wake-Up Call in the Merrimack Valley 

Tech firm Kronos Inc. moved to Lowell’s Cross Point towers in 2017, leaving more than 300,000 square feet of vacancies at its former Chelmsford offices. Kronos’ exit dealt another blow to an office market in which vacancies have consistently topped 20 percent since 2014.  

Chelmsford officials successfully pushed through an overlay district designed to attract live-work-play developments with flexible, fast-track permitting for retail, multifamily and hotels. One multifamily project has been approved so far, a 168-unit apartment complex at 104 Turnpike St. which broke ground in November. Another, Princeton Properties’ 108-unit Mill and 3 complex, was previously permitted under the state’s Chapter 40B affordable housing law. And a developer is seeking to attract a brewpub-style tenant to 197 Billerica Road, hoping to attract the first new dining option since the rezoning passed. 

“This is the first time since the overlay has been adopted that we’re beginning to hear of property owners who have reported serious interest in retail and restaurants, so this is very exciting,” said Evan Belansky, Chelmsford’s community development director. 

Chelmsford officials had high hopes for the future of the 21-acre former Mercury Systems campus at 199-201 Riverneck Road, near the Route 3-Route 129 interchange. The property, with two office buildings spanning 185,000 square feet, has five undeveloped acres and potential for retail and hotel projects with highway visibility. 

Manchester, New Hampshire-based Brady Sullivan Properties and CW Capital acquired the vacant property at auction for $5.2 million in December 2017 and are marketing the office space for lease. 

James Tobin, a leasing representative for Brady Sullivan, said the company may explore additional development after securing tenants for the existing 2-story buildings. 

“Chelmsford seems to be showing a willingness to play ball with developers down there,” Tobin said. “We’ve seen a lot of R&D requirements coming to the market, but we’re seeing office requirements as well.” 

Rising Industrial Demand a Factor 

With affordable office space for sale, Marlborough-based Digital Credit Union acquired the 125,000-square-foot former Kronos headquarters at 297 Billerica Road for $12.4 million in 2017. DCU currently has 150 employees at the Chelmsford operations center, with potential expansion to nearly 1,000 with a potential building expansion enabled by the zoning overlay, DCU spokesman Edward Niser said. 

Framingham-based SVN Parsons Commercial Group acquired part of the former Kronos campus at 2, 4 and 6 Omni Way in 2018 for $8.5 million and has leased up all but 22,500 square feet of the 215,665-square-foot portfolio. 

SVN Parsons originally considered redeveloping 2 Omni Way as retail space, said Matthew Quinlan, SVN Parsons’ assistant managing director of brokerage. But office leases by First Light Bio, robotics manufacturer Autoguide and the Massachusetts Department of Children and Families filled up the building and made redevelopment unnecessary. 

Other landlords may add flex industrial space to existing office buildings, responding to tenant demand, Quinlan said. 

Steve Adams

“There’s some potential for biotech and some light assembly manufacturing, because the pricing in Burlington and Waltham and Lexington is pushing people out and they can find pretty good values,” he said. 

Retail development may accelerate following completion of more housing, but a shortage of sizeable development parcels remains an obstacle, Colliers’ Klemmer said. 

“Retail guys would go in there tomorrow, but the problem up there is the most logical buildings were Omni Way to knock down and create some sort of a hotel and retail at the beginning of the street for everybody. Without some critical mass of property, you’re not going to get a MarketStreet Lynnfield.”