By: Cameron Sperance, Bisnow Boston
April 16, 2019
A $218M signal upgrade and entire fleet replacement set to roll out this year have developers along the Orange Line thinking they are on the fast track to success.
A lot of these tenants have one eye to the future and one eye to what is existing,” Federal Realty Investment Trust Vice President of Development Patrick McMahon said. “We certainly play up the upgrades to the Orange Line and what it means for connectivity to other transit nodes.”
The MBTA rail network has been more unreliable than usual lately. There have been two commuter rail derailments since the beginning of April, and alerts for delays at rush hour on subways and commuter rail are common.
For developers, there is a light at the end of the tunnel.
Massachusetts Gov. Charlie Baker announced in January plans to spend $8B over the next five years to improve the transit system, and the Orange Line will be the first to have an entirely new fleet and signaling system, boosting reliability and increasing headways between trains at rush hour to as little as three minutes. The first new trains are expected to arrive this summer.
Real estate experts have taken note as companies have moved to the northern Orange Line corridor, including some normally associated with the Red Line “brain train” corridor.
Puma is moving its North American headquarters to Federal Realty’s mixed-use Assembly Row development, already home to Partners HealthCare. Amazon is planning to station 200 Alexa employees at The Davis Cos.’ One Cabot Road in Medford, and Philips and Sanofi are both moving to Cambridge Crossing, nestled between the Green and Orange lines.
Sage Therapeutics is also in talks to expand at Cambridge Crossing, Bisnow first reported in March. Real estate analysts expect the tenant interest in the area to intensify in coming years.
“The demand curve is definitely going to change a little bit as, now that we’re at the tail end of building out the Seaport, there is this realization that there is no major transit going out past Fort Point,” Avison Young Senior Research Analyst Tucker White said.
The Near North submarket, as Avison Young dubs it, isn’t just limited to Assembly Row. Along with Puma’s headquarters under construction at 455 Grand Union Blvd. at Federal’s development, roadside assistant specialist Agero will move into a 115K SF headquarters at 400 River’s Edge in Medford near the Wellington Orange Line station.
“If we take a huge step back and look at Greater Boston, that I-93 corridor has a huge commuter rail population, and they’re not too inclined to go west since all rails lead to North and South Stations,” White said. “But if you put something north and south, it’s a lot easier from a transit perspective.”
Easier transit is also correlating to more jobs.
Massachusetts is expected to grow by 600,000 residents by 2040, according to the state’s 2018 “Choices for Stewardship: Recommendations to Meet the Transportation Future” report.
Greater Boston has seen 67% of the state’s population growth since 2010, and the state’s job growth is heavily centered around subway transit. Forty-two percent of the state’s net job growth has been in municipalities with high-frequency subway service.
“Developers are always on the front line of what policymakers are thinking about doing, as it can impact their holdings and what they are thinking about buying in the future,” CBRE Senior Vice President Brian Cohen said. “They’re well in tune to the thought process of the state and try to anticipate where policy objectives will take them because it unlocks new opportunities.”
Federal’s stance was more collaboration than anticipation. A combined $100M investment between the developer and government bodies boosted infrastructure around Assembly Row, including a new on-site, infill Orange Line station. The station makes it easier for visitors, residents and employees to get to Assembly Row’s mix of retail, residences and offices.
It also connects the development, and others in the Near North submarket, to the diverse housing stock in the four cities and numerous neighborhoods along the subway’s path.
“The number of neighborhoods the Orange Line spans is incredible, and they offer housing at all income levels — not just luxury product,” McMahon said. “It means employers here are able to offer their employees access to varied and affordable housing options.”
The location north of the city also allows developers in proximity to the Orange Line to cast a wider net for potential talent. Places like One Cabot Road and Assembly Row are minutes from downtown on the train, but they are removed from the city enough to make it easier and more appealing for suburban commuters.
NB Development Group has made a similar argument for its Boston Landing development in Allston/Brighton, where Framingham-based Bose opened a 98K SF office and Proteostasis Therapeutics and Roche Diagnostics Operations also have signed leases.
White thinks Amazon could be making a similar talent play with its Medford Alexa office. The company is already underway with a significant Seaport expansion and also has offices in Fort Point, Cambridge and Back Bay.
“Looking at sheer demographics, they’ll be able to grab a much more diverse labor pool from all aspects if you look at that area compared to the Seaport,” he said. “From the outside, the Seaport is a headache to get to. Amazon is hedging for the future, in my opinion.”