Wellesley’s Select Board has voted to support a Town Meeting article that would amend a zoning bylaw to allow up to 250 additional multi-family housing units to be built at the Wellesley Office Park site. That would bring the total of such units that could be developed on the John Hancock-owned property between Rtes. 9 and 128 near the Newton line to 850—some 350 “luxury” apartment units have been built to date as “The Nines” complex.

The Select Board discussed the matter at its Dec. 20 meeting (see Wellesley Media recording about 43 minutes in), a night after the Planning Board did likewise.

Peter Tamm, a real estate attorney with Goulston & Storrs, pledged that John Hancock/Manulife would partner with the town to rework 2019’s 40R development agreement that complements the bylaw approved at 2019’s Special Town Meeting to ensure any necessary changes that would support the increased multi-family unit allowance (more on Chapter 40R). Changes to that development agreement would only be valid if Town Meeting approved the proposed bylaw amendment.

Tamm described changes to the bylaw as being “surgical”—in other words, precise—and not wholesale changes to the arrangement for what the property owner is looking to re-market as Wellesley Park (without the “Office” in the middle). Not to say there won’t be some offices remaining at the 26-acre, 8-building property, all of which John Hancock is now marketing for development. The proposed change could improve flexibility for developers, increase the land value, and boost the town’s tax revenue.

“There’s zero interest in developing a hotel there,” Tamm said, referring to the current allowance for a 175-room hospitality development (he cited the unique negative impact that the pandemic has had on this industry). Adding up to 250 more residential units, perhaps including condos, would be a way to make use of the space to the benefit of the town and state in their effort to provide more housing. Tamm said he’d lean toward defining 25% of any new units as “affordable,” based on a percentage of Area Median Income, though said a range of price points could be considered within that 25%. One benefit to the town of allowing for more housing through a swap in uses for the property is that Wellesley could get around $700K from the state’s Department of Housing & Community Development as a 40R payment, he said. More than 60 of the units would need to be affordable, he said.

Unlike with The Nines, when it was first proposed, there is no specific project in mind yet this time around. Still, Select Board member Beth Sullivan Woods said it would be great to get a clearer picture of John Hancock’s “big vision” for the property so that the town can get a handle on what the safety, infrastructure, school, and other service needs might be in the long run (so far 30 of an anticipated 65 kids have become residents at The Nines). There could be the possibility of public safety equipment getting housed on site.

Select Board member Ann-Mara Lanza expressed hope that if more residential units are built in Wellesley Park (there, it’s catching on) that they will come at more reasonable price levels.

“I don’t think I’m alone in being saddened by the market rents at The Nines. I don’t think any of us anticipated it being that high,” she said.

Current nth degree pricing includes monthly rents of $2,700 for a studio, $7,850 for a 3-bedroom, 2-bathroom unit, and $2,100 for an “affordable” 1-bedroom, 1-bathroom unit (88 of The Nines units are deemed affordable per state guidelines). If this new proposal pans out, it’s unclear whether this possible new mix of 250 condos and apartments would get built before or after the originally defined 250 apartments that are allowed.

The Nines proved to be a key development in Wellesley’s effort to meet the state threshold for having at least 10% of its housing stock deemed affordable. Reaching that mark puts the town in a position to stave off some unfriendly development projects.

One challenge for the town now is helping make this island of housing at Wellesley Park, bordered by highways and the Charles River, more of a neighborhood. While pains were taken to make the development a green one, with electrical energy at the forefront, this is not an easy place to get anywhere else from unless you have a car or are a brave cyclist (well, there is the river and residents do have kayak access from a very nice walking woodland trail).

“Creating more of a neighborhood there would be a desirable thing for the people who already live there and for the town to have more of a critical mass over there,” Select Board Chair Lise Olney said.

More critical mass of residents or employees there is what’s needed to encourage retail development at what Tamm referred to as both “an outpost” and “secluded.” A firm marketing retail space at the property, doing what real estate marketers do, makes its pitch that “the project provides a restaurant or retail tenant exceptional connectivity and accessibility to the immediate and neighboring communities of Wellesley, Newton, Needham and beyond.”

Select Board member Tom Ulfelder noted that there are restrictions on the types of retail development allowed there based on the existing agreement, meaning you might see a 7-11, but not a Wegmans. He recommended that the Board get a refresh on the development agreement at a future meeting.

 

More:  Toward affordable— and attainable—housing in Wellesley

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Inspired by a recent Boston Globe article headlined “In Wellesley and the suburbs, the office market is thriving” (subscription may be required to read this), the Charles River Regional Chamber earlier this month held a panel discussion on the topic. While many of us have more interest in the residential market, the panel discussion highlighted how much of an impact the commercial real estate market has on us all.

Elizabeth Holmes, director of corporate services for commercial real estate firm R.W. Holmes Realty, shared a market overview of the high profile deals that have taken place and that could be in the works. Two thirds of office space in Wellesley has either been sold of late, or is on the market, she said, foreshadowing a drastically changing landscape.

“This is a staggering number and it’s been creating a transition and unique situation in Wellesley,” said Holmes, noting that two of the three Class A office parks in Wellesley have sold recently (93 Worcester St., for $111.5M, and 96-112 Worcester St. ,for $202M), and the other (Wellesley Office Park on William Street), is on the market. These properties have relatively high vacancy rates of more than a third, in large part due to big businesses leaving or downsizing, and presenting the property owners with new opportunities, such as conversion to lab space.

 

Class B space, which is generally less prominent and sizable than Class A space, has a much lower vacancy rate, as tenants have been more aggressive about getting employees back to the office. These Class B properties also boast lower square footage rates, more in the $36 area than $50+ for Class A property. Many of these Class B property tenants “do need the Wellesley address,” Holmes said. Still, tenants are looking for some of that more tired building inventory to get spruced up. Haynes Management owns a huge portion of this property and is in the process of selling it, promising a greater diversity of property management in town, Holmes said.

“How can you not look at some of the stuff on Washington Street and the acreage there and think wow, I could completely change the landscape of Wellesley if I had this acreage to convert into something else as long the town said it was OK,” Holmes said.

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One impact of these recent and future property sales will be higher rental rates as buyers invest in building upgrades, Holmes said. “[These buildings] are in need of the improvements. We are seeing a lot of tenants clamoring for that flight to quality… higher, better, more modern buildings are what everyone is looking for to get employees back to work,” she said. Shrinking inventory, as properties are converted to lab space or multifamily residences, will also contribute to rising rents, she said.

Conversions are leading to tenants getting kicked out to make way for labs, Holmes said. Fellow panelist Joel Kadis, co-CEO & partner at Linear Retail Properties, said this just happened with his firm in Burlington, as they were told the lease wouldn’t be extended and there was no flexibility on timing. Fortunately, Linear was able to get a good new headquarters property.

Tenants figuring they might have plenty of properties to choose from coming out of the pandemic have been”shocked” to find a paucity of desirable and affordable Class A options, Holmes said.

Panelist Scott Faber, senior VP of investments for Lincoln Property Co., said flexibility is the key for both property owners and tenants as the market is reshaped. Some outfits that planned to get people back into renewed space have decided to sit things out for a while longer, he said. Buildings with easy access to highways, for those looking for ideal commutes, are proving attractive.

From a broader perspective, Faber said the conversion of office space to new uses should keep the commercial real estate market here healthier than in some other areas nationally and locally, including downtown Boston’s financial district, which is suffering from high vacancies.

The panelists complimented Wellesley’s economic development efforts in recent years (and even back 10-plus years, per Kadis), both for helping make office space and downtown retail space attractive. These efforts have included more relaxed alcohol licensing, pilots such as the Cross and Central Street parklet, Wellesley Wonderful merchant activities, and coming soon, revamped streetscapes.

Making amenities such as restaurants available nearby office space that might be dealing with closed cafeterias and gyms coming out of the pandemic, is important, Holmes said.

Amy Frigulietti, assistant executive director for Wellesley, said the town has tried to look at thing holistically, guided in part by various planning documents such as its Unified Plan, Housing Production Plan, Sustainable Mobility Plan, and Climate Action Plan. This includes addressing the need for more affordable housing for those who might be working at retail establishments.

Kadis, whose firm owns about 40% of commercial properties on Central Street downtown (“and that wasn’t be accident”), says he appreciates the town being proactive. He didn’t freak out over the empty storefronts that have dotted the town in recent years, and celebrated the arrival of new restaurants to fill some of those spaces thanks in large part to new dining rules.

“COVID was not what worried me the most about retail, it was really online sales,” Kadis said. Online sales have led a transition in which in-person retailers that provide services and experiences are more likely to flourish, he said. He’s bullish on the replacement of CVS downtown with a new Black & Blue restaurant, a business he says never would have come to that space without the town’s more flexible dining and alcohol rules.

Kadis, whose father owned a drug store in Newtonville, pledged that Linear does its best to accommodate small, locally-owned businesses like the Toy Shop and Cheese Shop as well. “When we bought the block with the Cheese Shop the first thing my wife said was ‘Don’t you dare get rid of that cheese shop,'” he said, adding that Linear’s philosophy is to support a mix of tenants. Kadis says one thing that some underestimate about the Wellesley market is that not only are many residents wealthy, but that there are a lot of residents packed into a relatively small area, unlike say in Weston.

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