Excavation work is underway along Highland Avenue, demolishing the five 1960s era commercial buildings between Cross Street and Arbor Road to clear the site for a 50,000-square-foot, two-story medical office building.
The demolition process could take between two and three months to complete, but there’s no schedule for when construction of the new facility will begin, according to Jodie Zussman, president and CEO of Boston Development Group, the owner of the property.
Zussman said the Newton-based firm is mostly at the mercy of the overall construction market as well as certain constraints imposed on the site by Needham zoning requirements.
“We’ve been working on pricing this building for construction, but because of the interest rates and because of the cost of construction, it’s really delayed our project greatly,” Zussman said of the scheduling for the project, which received Needham Planning Board’s approval in December 2023.
“Most of the cost is really in the parking,” Zussman said of the need to provide 250 parking spaces to satisfy the town’s zoning bylaw that requires five spaces for every 1,000 square feet of office space. Another bylaw imposing a 40-foot building height limit requires much of the parking to be located underground, adding considerably to the cost of construction, Zussman explained.
“At this point, everything that we’ve looked at is really just a break even and almost a little bit of a loss,” she said. “So right now we’re taking down the buildings, but we’re not going to do any construction until we know we can work up the numbers and we have a tenant for it.”
Boston Development was the longtime owner of three of the former buildings at the site which stretched from 629-661 Highland Ave. It purchased the other two buildings to consolidate ownership to facilitate the medical office project at what will now be 633 Highland Ave.
The site was home to a variety of small businesses over the years, including Kennedy Brothers physical therapy, Med-Equip Healthcare Supply, HIY Pilates and a nonprofit, Hope and Comfort.
“We had three buildings there that were not an eye-sore, but they were industrial buildings that my father had converted to office a long, long time ago,” Zussman said of the genesis of the project. “The rates for rent had never really increased substantially like the market had.”
The area is zoned for industrial use and does not allow residential properties. Zussman said attempting to change the zoning would have been overly time-consuming, so they evaluated uses that conformed to the zoning.
“In trying to identify what the best use would be for that land, we decided there really weren’t many medical offices being built,” she said.
“I think with a lot of the hospitals now having so many layoffs and reducing their staff, that these doctors are maybe wanting to have their own offices closer to home. And Needham is a perfect location.”
The preferred outcome would be for a single tenant to occupy the entire building, Zussman said. She said they are also in discussions with companies that would be willing to occupy one floor each.
“We’re working with our contractor to try and reduce the cost by thinking outside of the box. Maybe we would condo the two floors instead of renting them.”
Asked why demolition went forward without a scheduled construction start, Zussman said, “We were told by brokers that if you take down the buildings and you have the raw land there, you may be able to attract more tenants because they see that you’re ready to go. We’ll be in a better position to start construction immediately when we find a tenant.”
Zussman admits that some factors are out of the company’s control.
“We have had a lot of interest, but we need to get our construction costs down,” she said. “And we need the interest rates to come down.”
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