Fixing Another Flawed Government Center Malden Square Attracts Investors
By Steve Adams | Banker & Tradesman Staff | May 15, 2016
Boston-based Berkeley Investments plans to reposition 200 Exchange St. in Malden as a mixed-use office and data center complex with ground-floor retail and restaurant space.
The first thing that stood out to Sandi Silk was the transit numbers.
Nearly 13,000 commuters hop on and off the MBTA’s Orange Line at Malden Center station daily. That’s virtually identical to the ridership at a nearby economic development success story: Somerville’s Davis Square.
“There’s a lot of markers in Malden that suggest the time is right for transformation,” said Silk, a partner and vice president of development for Jefferson Apartment Group.
Malden’s bustling transit hub is a big reason officials and developers think the downtown can be revived. The city is preparing to sell its city hall and the police station across the street to Jefferson Apartment Group to make way for a 3.4-acre mixed-use development including retail and hundreds of market-rate apartments.
For decades, Malden has been trying to fix its urban planning mistakes of the 1970s. A series of land-use studies have pointed out the shortcomings of Malden Square – and its considerable potential. The monolithic city hall building presents a barrier to commuters who use the transit station, just a 12-minute ride to Boston’s Haymarket, and gives them little encouragement to linger.
Next to city hall sits a sprawling former Bank of New England operations center that looks transported from a 1970s office park. Boston-based Berkeley Investments acquired the 4-story, 314,176-square-foot building at 200 Exchange St. last month for $21.7 million. It hired Stantec to design a mixed-use repositioning project, including 15,000 square feet of street-facing shops and cafes.
“Being 50 feet across the street from the fifth-busiest station on the Orange Line was the biggest thing for us,” said Elizabeth Mahoney, director of acquisitions for Berkeley Investments. “People are talking about the advantages of being right off the Orange Line at Assembly Row (in Somerville) and Station Landing (in Medford), and Malden is certainly benefiting from that.”
To break up the massive 80,000-square-foot floor plates, an atrium would be built on the third and fourth floors. Up to 200,000 square feet of creative office space will be made available to companies looking for rent savings compared with Boston and Cambridge. BofA currently occupies space on the lower floors and will remain for at least 18 months, Mahoney said.
The possible infusion of well-paying jobs fills a piece of the puzzle as Malden attempts to reinvent its downtown, Mayor Gary Christenson said. New market-rate apartments have been built and more are on the way, but vacant storefronts remain a sore spot and Malden is anxious to join in Greater Boston’s tech employment boom.
“The one component we’re missing that we hope Berkeley will step in and support is more office space for more employees and more companies,” Christenson said.
Complex Choked Off The Downtown
The 5-story Government Center complex was built in the mid-1970s for local, state and federal agencies. Many have since relocated, and today the city government occupies just 40,000 square feet within the 120,000-square-foot complex, Christenson said.
Construction of the complex dead-ended Pleasant Street, one of the downtown’s main arteries, discourages transit commuters from making their way to local shops on foot.
“The building I sit in at the moment is like a chokehold on the rest of the square in terms of the retail,” said Deborah Burke, executive director of the Malden Redevelopment Authority.
Over the years, suburban-style strip malls were built on nearby Route 60. Jordan Marsh, the downtown’s anchor store, departed while new shopping centers in the Wellington Circle area siphoned off more customers.
At community forums a decade ago, Malden residents were outspoken about their desire to revive a walkable downtown.
“The hope was that we would have an area that people could eat, live, worship and shop all in one spot. And then lo and behold, 10 years later, that philosophy is being borne out by the Millennials,” Christenson said.
The city in 2013 selected Jefferson Apartment Group as the preferred redeveloper of the city hall property. It will build 325 market-rate apartments, 21,500 square feet of retail, 320 parking spaces and a 44,500-square-foot office condominium for the municipal offices.
Since 2014, nearly 600 market-rate apartments have been built or are under construction in the downtown area. Combined Properties Inc. is building 210 apartments at 150 Exchange St., next to the BofA building, and Corcoran Jennison Cos. is renovating the former Masonic Lodge on Pleasant Street into 69 market-rate units.
The infusion of residents, Christenson predicts, will benefit retailers and restaurants and attract tenants to vacant storefronts. City officials once were reluctant to approve housing in the downtown, placing a higher priority on attracting retail.
“What we quickly learned is the businesses weren’t going to come until they had someone to serve,” Christenson said.
Like much of Greater Boston, multifamily properties in Malden are seeing rent growth reflecting the region’s strong economy and limited housing supply.
CBRE New England is marketing for sale the 195-unit 480 Main St. At Malden Square complex, which has average rents of $1,844 per month, or $3.41 per square foot. The complex has attained 10.5 percent rent growth since it opened in April 2015, according to a marketing sheet.
Average rents in the Mystic River North and Cambridge-Watertown apartment submarkets were $2,343 per month in late 2015, according to research by CBRE Econometric Advisors. With vacancy rates expected to remain below 5 percent, rents will grow at 3.6 percent in the next few years, according to the firm.
Moving Day In October
Under the terms of a land disposition agreement, Jefferson Apartment Group will pay $9.8 million to acquire the city hall and police station site. It also has agreed to buy the neighboring property of the First Church in Malden, which will relocate.
Nearly $10 million in MassWorks infrastructure grants will support the project. A new police station is being built at 800 Eastern Ave., while city hall departments will relocate to temporary quarters at 17 and 110 Pleasant St. until the new city hall is completed. Jefferson is expected to close on the city hall parcel in October and begin demolition.
No one was happier than Silk to hear that Berkeley Investments was buying the bank building. Berkeley has a history of successful adaptive reuse projects in once-stagnant, now-booming parts of Boston and the suburbs, and Berkeley President Young Park contacted Silk to compare notes about the look of the two developments. Jefferson relocated its garage entrance so vehicles wouldn’t be exiting across from the office building’s front door.
“The fact that this kind of dead corner that existed is going to become more vibrant is huge for the future of Malden Center,” Silk said of the Berkeley property. “For us, the true measure of success is the domino effect further down the line after our project comes online.”