Category Archives: Back Bay Commercial Real Estate

0 Boston Tech Firms Are Laying Off Hundreds. Will The Office Market Feel It?

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In Cameron Sperance’s latest, he says that, “TAMI tenants accounted for 40% of all office transactions in Boston’s central business district last year.”  Fresh off of over 140 leases in 2019, Managing Partner of Boston Realty Advisors, Wil Catlin said, “Office space in Boston has become a commodity, and commercial landlords are stepping up to ensure their asset is ready for today’s workforce. It’s a competitive environment and the landlords with quality, ready-to-go space are getting deals done.”

By Cameron Sperance | Bisnow | March 5, 2020

A string of recent layoffs in Boston was bad news for the city’s typically robust tech sector. But analysts say the furloughs have more to do with normal business operations than signs of a tech pullback from Beantown.

Cambridge-based Akamai Technologies cut around 75 jobs in early February. Wayfair laid off 550 employees worldwide, including 350 employees at its Boston headquarters, Feb. 13. The following week, Boston-based software company LogMeIn cut 300 jobs, nearly 70 of which were in Boston. Agricultural tech startup Indigo Ag then announced at the end of last month it was laying off 150 employees.

Wayfair’s job cuts were tied to the company’s previous overexpansion. LogMeIn said its layoffs were due to “evolving priorities,” per the Boston Globe. Indigo Ag is “focusing resources on the fastest growing aspects of the business,” the company said in a statement to Bisnow.

Akamai, Wayfair, LogMeIn declined or didn’t respond to requests for comment. But Boston real estate experts don’t see the layoffs impacting the office market.

“I don’t sit at the dashboard of Wayfair, but it’s normal to right-size,” Boston Realty Advisors Managing Director and Senior Partner Wil Catlin said. “What’s happening is labor is your No. 1 item on the [income statement]. But if you choose to let go of 10% of those people, you’re not going to get rid of 10% of your office space. You’re getting rid of that salary component.”

The February layoffs followed Needham-based TripAdvisor’s 200-job cut in January. Even if the layoffs are perceived as standard business practice, the impacted companies are leading office tenants across Greater Boston, which means this could ripple through property. Numerous tech companies, including Indigo Ag, are actively seeking hundreds of thousands of square feet for office expansion, according to independent brokerage documents obtained by Bisnow.

Catlin, who focuses on small to midsized tenants, doesn’t expect that demand to go away. A little more than 70% of the active tenants of that size are TAMI (tech, advertising, media and information) companies, Catlin said. Office developers are almost exclusively building for those kind of tenants.

“Today, subleases are few and far between and typically lease off market,” Catlin said. “Office space in Boston has become a commodity, and commercial landlords are stepping up to ensure their asset is ready for today’s workforce. It’s a competitive environment and the landlords with quality, ready-to-go space are getting deals done.”

Boston is the third-fastest growing tech hub in the U.S., according to job listing site Indeed. But housing production hasn’t kept up with the surge of new workers flooding into Boston, pushing costs higher and higher. Boston is the second-most-expensive city to own a home, according to a January report by moving research firm Move.org.

The high cost of living could be weighing on employers determining who stays in the urban core and who could be employed in a cheaper environment.

“It’s getting tougher and tougher to keep those borderless sales jobs in downtown Boston,” Hunneman Director of Research Tucker White said.

Other major Boston companies have been moving select operations out of the city for years. Fidelity Investments announced in 2011 it was moving 1,100 jobs from its downtown headquarters to other parts of the country. Liberty Mutual maintains its corporate headquarters in Back Bay, but has also built a Plano, Texas, campus where the insurance provider is expected to eventually employ 4,000.

Tech companies could be looking to do the same, especially with artificial intelligence expected to impact as much as 25% of all U.S. jobs, including many tech jobs.

“Wayfair is committed to Boston and that’s allowed them to grow, but at the end of the day, they’re still paying a comparatively high real estate cost to other markets and can hire similar personnel elsewhere,” White said.

There may have been a string of early 2020 tech layoffs in Boston, but there have also been some industry wins.

Boston-based restaurant tech firm Toast is now valued at $4.9B after a $400M round of fundraising. Its revenue increased 109% in 2019 due to thousands of new restaurants using its payment hardware, Toast announced last month.

Following its planned merger with sportsbook technology provider SBTech, DraftKings is expected to be valued at $3.3B. The fantasy sports company is headquartered in Back Bay and has the leading U.S. market share for sports betting, according to Morgan Stanley.

Amazon continues to expand its tech reach across Greater Boston, with new offices planned for Medford and the Seaport.

There are 23,764 open tech jobs across Massachusetts — with more than 9,000 in Boston alone, according to Burning Glass Labor Insight data. That is more than 1,000 more open positions than there were at the end of 2019.

The collective, ongoing growth is enough to offset the layoffs, according to one of the state’s leading tech voices.

“When you look at each of the examples [of layoffs], there are real business reasons for it and [it] doesn’t reflect a larger trend in the economy,” said Pat Larkin, director of the Massachusetts Technology Collaborative Innovation Institute. “We don’t view what happened as a trend.”

Professional, scientific, technical services and information tenants, which encompass the TAMI sectors, have the largest office footprint in Boston, with a little more than 34% of the overall office sector, according to Newmark Knight Frank. TAMI tenants accounted for 40% of all office transactions in Boston’s central business district last year.

Despite the layoffs, strong demand coupled with job growth from burgeoning sectors like cybersecurity and digital health keep brokers and landlords cautiously optimistic in signing deals with tech tenants.

“Landlords don’t want a repeat of the bust era and are being mindful to sign tenants that can perform to the lease terms they have available,” Catlin said.

0 Car Bans for Select Boston Streets?

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Back Bay on a busy summer day

Credit: twitter

Imagine no longer hoping for a parking spot on Newbury Street in Back Bay…

What do you think?

From the Boston Globe:

During a “Twitter chat” Wednesday with Mayor Martin J. Walsh, where the mayor answers constituents’ questions on social media, a city official gave an intriguing response to one person’s question about whether Boston would ever limit traffic on certain streets to allow for a pedestrian takeover.

“How about closing streets like Newbury, Union, and Hanover to traffic on certain days in the Summer?” asked Adam Castiglioni, who runs a blog about Boston hospitality.

The city responded by saying the concept was already on their radar…”Stay tuned for [information] later this summer,” the City of Boston Twitter account replied.

0 Real Estate Developments Planned for Boston Train Stations

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proposed developments at Boston train stations

Credit: Boston Globe

Train and towers will be the combination for three large-scale projects at prime Boston locations, including South Station, Back Bay Station and North Station.

Brief excerpts on each impending Boston train station development from the Boston Globe:

North Station
Boston Properties and Delaware North have already begun construction at North Station. That project will eventually include a 38-story residential tower, two shorter buildings, and a massive retail complex at the long-empty site of the old Boston Garden on Causeway Street.

Back Bay Station
Across town, Boston Properties recently unveiled an ambitious vision to remake Back Bay Station and a neighboring parking garage as the base of a trio of buildings that would join the Back Bay and the South End.

South Station
And at South Station, the Houston developer Hines is attempting to kickstart long-stalled plans to build what would be among the tallest buildings in the city.

According to the Boston Globe article, “all three projects are complex, in terms of engineering and economics. But for the cash-strapped Massachusetts Bay Transportation Authority, they bring deep-pocketed partners who could help pay for needed transit improvements…In return, the developers would get access to some of the best locations in a crowded city with a growing population, where getting around can be a challenge.”

0 LEGO Education Opens HQ in Back Bay

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new lego education building in Back Bay

Credit: B

Lego is amazing and I used it as a kid and my kids now use it. It has evolved in so many ways and I never figured I would work a few blocks for their office which is now located at 501 Boylston Street in Boston Back Bay.

LEGO Fun Facts:

  • There are about 62 LEGO bricks for every one of the world’s 6 billion inhabitants. Children around the world spend 5 billion hours a year playing with LEGO bricks.
  • LEGO bricks are available in 53 different colors.
  • 19 billion LEGO elements are produced every year. 2.16 million LEGO elements are molded every hour, or 36,000 per minute.
  • More than 400 billion LEGO bricks have been produced since 1949.
  • Two eight-stud LEGO bricks of the same color can be combined in 24 different ways. Three eight-stud bricks can be combined in 1,060 ways. There are more than 915 million combinations possible for six 2 x 4 LEGO bricks of the same color.
  • 7 LEGO sets are sold by retailers every second around the world.
  • The LEGO bricks sold in one year would circle the world 5 times.
  • 40 billion LEGO bricks stacked on top of one another would connect the earth with the moon.

 

0 Wayfair’s Chic Boston Office Space Reflects its Core Products

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Wayfair HQ

Credit: Boston.com

Wayfair has come to the market with creative radio and TV ads and changed the traditional office environment from cubes and offices into collaborative environment for its ever expanding workforce.

From Boston.com:

With names like “Nordic,” “Safari,” “Whimsy,” and “Cat Tree,” each room at Wayfair’s headquarters at 4 Copley Place is themed to remind employees of a motif or product the rapidly expanding company sells. While “Safari” might feature zebra-print rugs and exotic throw pillows, employees working in “Cat Tree” get to enjoy a slightly quirkier office vibe with avocado-colored wallpaper covered in playful cats.

“We have all these smaller spaces set up to look like actual living rooms using the furniture we actually sell,” said Jess Merrell, event marketer for Wayfair. “That way everything feels more comfortable to get things done. We don’t have to go to Starbucks to have a private conversation.”

0 Boston Office Rents Hit Decade High

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Office space in Boston

Credit: Boston Business Journal

The Commonwealth of Massachusetts holds a few distinctions aside from high office rents and expensive homes; Massachusetts is the highest educated state, and as such, holds the potential to attract top talent.

According to the BBJ, “rents for large office space in Greater Boston hit their highest levels in at least a decade in the fourth quarter of 2015, with the vacancy rate dropping to its lowest level since 2007…The total vacancy rate fell to 13.8 percent from 14.3 percent the previous quarter.”

You can read the full article, here.

0 Boylston Street Office Rents Rank 7th on List of Country’s Most Expensive

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Boylston Street offices in Back Bay

Credit: Boston Herald

Boylston Street in Boston’s Back Bay is expensive, but not too expensive. In the 2nd quarter of this year my company signed an expansion and renewal at 745 Boylston Street after conducting a thorough search for alternate options.  We chose to stay and expand based on our attraction to the area’s amenities, proximity to highways and our customers.

Office rents on Boylston Street, however, do rank among the priciest in the country, according to the Boston Herald.

From the Boston Herald:

The Back Bay’s main thoroughfare has an average rent of $67.44 per square foot, thanks to its marquis office properties and tenant list dominated by hedge funds, and private equity and law firms, according to a report by Jones Lang LaSalle, a Chicago commercial real estate company…Those factors have allowed Boylston Street landlords to raise rents 1.3 times faster than on other cities’­ most expensive streets since 2013, the JLL report states. And Boston Properties’ 888 Boylston St., a 17-story office tower set for completion next summer, already has signed record-high leases.

 

0 Tesla Opens first Boston Store, Mulls Area Expansion

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Tesla in Boston back bay

Credit: BBJ

Boylston Street in Boston’s Back Bay continues to one of the nation’s top technology roads for retailers.  Tesla @800 Boylston will open shorty and will accompany other tech retailers like:

  • Apple @ 815 Boylston
  • Verizon @ 699 Boylston
  • AT&T @ 745 Boylston
  • Microsoft @ 800 Boylston

Some history of Boylston Street from Wikipedia:

Boylston Street is the name of a major east-west thoroughfare in the city of Boston, Massachusetts. The Boston street was known as Frog Lane in the early 18th century and was later known as Common Street. It was later again renamed for Ward Nicholas Boylston (1747–1828),[1][2][3][4] a man of wealth and refinement, an officer of the Crown, and philanthropist. Boylston, who was a descendent of Zabdiel Boylston,[5] was born in Boston and spent much of his life in it. The Boylston Market was named after him as was the town of Boylston, Massachusetts.[3]

According to the BBJ, “A second new store will open in the Derby Street Shoppes in Hingham in December…Tesla spokeswoman Alexis Georgeson said the company also has an interest in opening a store in Chestnut Hill, but has no plans right now.”

You can read more on Tesla’s planned Boston expansion on the Boston Business Journal.

0 Tesla Store Coming to Boylston Street in Boston

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Tesla Store Back Bay Boston

Credit: BBJ

Boylston Street continues its technology leadership role with anchor stores from Apple, Verizon, AT&T, Microsoft to its newest Tesla Motors.  Tesla will be one of the newest addition to the Shops at Prudential in Boston’s Back Bay.  The Prudential complex consists of:

  • 800 Boylston Street
  • 101 Huntington Avenue
  • 111 Huntington Avenue
  • 888 Boylston Street

A BBJ article, covering the announcement of a Back Bay Tesla store, notes the following:

“We are excited to have a larger presence in Boston,” said a Tesla spokeswoman in an email, adding the store would host an “opening event” in the next several weeks. She declined to discuss any other other details of the retail store. Tesla already has two stores in Massachusetts, one in Natick and one in Dedham. The company also has a service center in Watertown. A company spokesman recently told the Boston Herald that it has plans to open more stores in Massachusetts over the next two years.