By now, you are well aware of Dell’s impending acquisition of Hopkinton-based technology giant EMC. Reactions to the deal have been mixed, especially as they relate to the local impact. With respect to employee headcount, Michael Dell has alluded to the potential for some “cost synergies” in the future, and indeed there have already been staff cuts announced at EMC subsidiary VMware, based locally in Burlington and Cambridge.
This all has many people in our industry wondering what the ultimate ramifications will be on the real estate market. As it stands right now, EMC maintains a dominant presence along South Street in Hopkinton and also own buildings in Westborough and Southborough that were part of the Data General acquisition many years ago. In fact, EMC owns and/or leases a total of over 2.8 million square feet in the MetroWest market alone.
So, what happens to all this property when Dell & EMC merge? Already EMC has put 4 buildings on the market totaling nearly 400,000 square feet at 3400 Computer Drive in Westborough, 52 and 80 South Street in Hopkinton, and 31 Maple Street in Bellingham. That said, despite this, we don’t expect EMC to just close up shop and abandon the area entirely. There is way too much infrastructure and intellectual capital already established there to just shut down. Not to mention, EMC’s robust sales force is considered by many to be best in class.
There is a possibility EMC could further vacate a portion of its sprawling 2.8 million square feet of space, adding supply to the market and putting downward pressure on rents. However, given the specialized nature of these properties, if that were to happen, EMC’s product wouldn’t necessarily compete with the majority of other buildings in the market.
What it would do is give the area an opportunity to reinvent itself. By repurposing EMC’s buildings to meet the needs of red-hot industries like life sciences, it could attract companies struggling to find space in Cambridge who would benefit from the skilled workforce and accessibility Hopkinton offers.
At this point, it’s probably still too early to make any concrete conjectures. Nonetheless, the implications of such a significant merger in our area are far reaching, and the real estate market is not exempt from the impact. However, as with every significant event like this, there are sure to be new opportunities arising and we see the possibility for some positive outcomes.
Please feel free to contact me with any questions you may have about this or anything else in the MetroWest market.