TJX buys Fidelity buildings in Marlborough
Deal provides needed boost to I-495 market
Off-price retail giant TJX Cos. is dramatically expanding its Massachusetts offices, moving Wednesday to buy a pair of Fidelity Investments buildings in Marlborough where it will establish a new headquarters complex.
The deal is a blockbuster for the office market in the far suburbs, which has been slow to recover. It also reflects the strength of TJX, one of the state’s largest companies and a major employer in the Metrowest area.
TJX did not disclose the purchase price, but an executive with knowledge of the transaction said the company will pay about $72 million for the two buildings being vacated by Fidelity at 300 and 400 Puritan Way in Marlborough. The retailer, which operates chains such as T.J. Maxx, Marshalls, and HomeGoods, said it intends to renovate the buildings and move to the property by fall 2013.
“This space is expected to house certain home office operations and will help TJX accommodate its future growth plans,’’ Sherry Lang, the company’s head of communications, said Wednesday. "We are concurrently working hard to maintain our home office location at 770 Cochituate Road in Framingham, which, together with Marlborough, would provide TJX with two major campuses operating in close proximity to one another."
It would not disclose how many employees will move to the Marlborough buildings, which combined have 715,000 square feet of office space.
The transaction also fills a giant hole in the Interstate 495 office market, where Fidelity’s decision to leave a year ago contributed to growing vacancies and declining rents.
TJX, which has thousands of employees in the state, declined to discuss whether it will hire additional workers as part of the move, or has done so already. Real estate specialists familiar with the company’s office holdings said it ran out of room in Framingham and has been looking for a large chunk of space for more than a year.
A brochure for the Marlborough complex, which was marketed by Cushman & Wakefield, indicates the two buildings can accommodate up to 4,000 employees.
Despite weakness in the economy, TJX continued to report increases in sales and profits. In 2010, a year when many other companies were struggling, its revenue rose 8.2 percent to $21.9 billion, and its profit margin increased 2.3 percent. Last month, it announced more sales growth, reporting a 12 percent jump in February sales compared with the same period in 2011.
Its stock closed at $37.16 Wednesday, up 35 cents, or nearly 1 percent.
Fidelity announced the closure of its Marlborough facility in March 2011, saying it would relocate 1,100 employees mostly to existing offices in Rhode Island and New Hampshire. The move took Massachusetts officials by surprise, stirring concern about Fidelity’s diminishing employment in the state.
On Wednesday, a spokeswoman for Fidelity said the company has developed a transition plan for the remaining employees in the Marlborough buildings. “We have had plans to phase out our operations in Marlborough and are pleased that the buildings will be put into productive use by another company,’’ said the spokeswoman, Jennifer Engle.
As of the end of 2011, Fidelity had about 7,600 employees in Massachusetts.
Real estate specialists said the sale of Fidelity’s buildings to TJX is a significant boost for the real estate market along I-495, where many landlords have struggled during the economic downturn. The vacancy rate in the area’s office buildings is around 27.4 percent; the TJX deal alone will bring it down to about 19.4 percent.
“It’s a huge vote of confidence for this submarket,’’ said Kevin Hanna, a managing director for Cassidy Turley FHO, a real estate services firm. “It fills a huge hole left by Fidelity and this represents net new growth (for TJX). It’s not just a company moving from one place to another.’’
Average negotiated rents at top-rated buildings in the area have dropped to about $20.50 per square foot, down from nearly $34 when the region was hot during the technology boom of the late 1990s. But brokers said activity is now beginning to pick up, with a growing number of companies looking to expand in the aftermath of the downturn.
The TJX deal is among the biggest in the region in the past decade. The transaction comes as companies are also looking at the vacant Hewlett-Packard complex in Maynard, which contains about 900,000 square feet and also has the potential to significantly alter the market. Keurig Inc., the maker of coffee brewers, is among the companies looking at the space, according to a real estate executive with knowledge of the process.
Casey Ross can be reached at email@example.com.