Pull out a map and take a look at I-95, then look at the exits. Nearly every exit is packed with commercial property, whether it’s office parks, hotels, big box retailers, or major shopping malls. For most municipalities along this major stretch of roadway, I-95 is a cash cow that drives commercial tax revenue, helping keep those communities afloat.
Except Newton.
Often, the question comes up: Why can’t Newton attract a big corporate tenant? Why don’t we have the labs that got built in Watertown? Why is Waltham home to so many companies when their CEOs live here?
The answer is complicated, but part of it lies on the highway.
When I-95 came through, most of our developable land was already occupied. Lower Falls, for example, was an existing community. But in a place like Needham, the area now known as Needham Crossing was relatively vacant, giving rise to one of the nation’s first suburban industrial parks. About a decade ago, when that area changed hands and was ready for new development, Needham rezoned it to encourage growth. Today, it’s home to brands like TripAdvisor, SharkNinja, and BigBelly Solar, as well as housing and a new medical building.
Jeremy Fried, a Newton resident who has spent the past 20 years helping businesses find offices in the suburbs through his firm 128CRE, says that Newton has mostly smaller boutique buildings that don’t work for larger tenants. He notes that people tend to want broad geography, like south of Route 9 or somewhere on 128; they aren’t usually buying a specific address like Newton or Watertown. They want to attract the best talent, and that means “access to a highway, major amenities and a good space,” he told me.
Newton has limited spaces that meet this standard.
There are a few, like the large building on Grove Street or the offices in Newton Corner, but our villages simply lack the inventory and access. Wells Avenue comes up in discussions quite a bit, but its distance from the highway and the availability in Needham Crossing make that a tougher sell. No amount of widening the road will solve that basic bit of geography.
Newton’s office vacancy rate sits at about 20 percent, according to CoStar data. Which is higher than it has been in the past, but certainly within a historically normal range. It’s down about 4 percent from a year ago. But consider that we’re not likely to see much new commercial office space come on the market any time soon. That’s not just because of the renters, but because of the investors.
Fried points out that the cost of debt and construction means that, here in Newton, people tend to either build very small, usually three to five units, or large residential of more than 100 units. Anything else doesn’t make financial sense to most developers.
Historically, our zoning has meant that nearly every project went through a special permit process and the uncertainty of dealing with a large political body chases off most developers. They would prefer to work in places with a simpler, faster, and more predictable process rather than being subject to the political winds.
One developer told me that communities like Cambridge and Lexington were in a similar position about a decade ago, but they worked hard to make the processes easier and faster. That’s paid off in commercial growth.
To be fair, we’ve made some strides and are working to get better, but the reputation for how difficult it is to build anything of true scale means that during the years when commercial development was a viable option in the suburbs, we lost out. It’s worth noting here that the last hotel built in Newton was in 1971, while hotels have gone up in Needham, Waltham, and Watertown. Most of those tend to be well used. We have to stop and ask why.
Commercial property makes up a paltry 8.7 percent of real property value in Newton, well below neighboring cities. It’s why every time a commercial property becomes residential, city councilors worry about the loss.
The conundrum is that even when commercial property was hot in the Boston market, we couldn’t build it fast enough to make a dent. According to an economic development study done in 2019, to reach 10 percent share of commercial, we would need to build two more Wells Avenue office parks or three more retail projects the size of The Street in Chestnut Hill. That’s simply not possible.
If the highway is the benchmark, then our last, best hope for commercial is about to become a mix of residential and retail.
Over the long history of Riverside we’ve had corporate development proposed there, and it tended to die as the city worked through the process. So it’s not like we’ve gone without opportunities. We simply haven’t been able to capitalize on those.
But that could also be our answer to growth, as it enables us to lean into our strengths. We are a great place to live, and we have a strong retail environment. Focusing more of our effort on quality of life improvement that could make this a better place to live and shop would bring in people and workers.
The economic opportunities we have today are the result of decades of decisions, so we need to look at our decisions today as the economic drivers that will pay off five or 10 years from now. We have the opportunity today to build on our strengths and grow our talent base, making us much more attractive to businesses in the long run.
Chuck Tanowitz is a Newton resident who has been involved in local economic development for more than a decade. He can be reached at chucktanowitz@gmail.com.