What Boston Class A towers are experiencing vacancy in the midst of a strong office market?
According to the BBJ, “many professional services firms are leaving the more traditional high-rise for gleaming new offices — most often on lower floors — in Boston’s Seaport District. And the wave of technology tenants taking their place aren’t interested in paying top dollar to take over high-rise leases. Rather, they have shown a preference to live, work and play at the center of a buzzing urban neighborhood…That’s increasingly left Boston with multiple towers with blocks of high-rise vacancy, as space closer to the ground gets ever more unavailable.”
The BBJ article further notes, “at the end of March, vacancy in high-rise offices (floors 23 and above) in the Financial District was at 16.3 percent, compared with 10.9 percent in mid-rise space (floors 13-22) and 7.4 percent in low-rise floors (1-12), per Cushman & Wakefield research.”
More information is available on the Boston Business Journal’s website, here.
Boston ranks 6th nationally for office vacancy.
According to a report on the BBJ, “at 12 percent vacancy, Boston’s office market dipped by 1.2 percent year-over-year and was the sixth-tightest in the U.S., the report said. New York and Washington, D.C. ranked as the tightest office markets, each with 9.1 percent vacancy, followed by San Francisco at 10.2 percent and Seattle at 10.9 percent.”
Additional details are available on its website, here.
The newest Tech-friendly office tower could be a crucial differentiator in Class A Financial District office space, with delivery in 2020.
According to Bisnow, Trans National CEO Steve Belkin and EVP (development) Justin Krebs want to help Boston become a global financial/tech innovation cluster…proposing “a $900M tower downtown that would include an elaborate two-story 22,500 SF Entrepreneurial Innovation Center that’s free to the public. They hope that the space where financial services pros, tech talent and university folk join forces will help elevate Boston’s brand as a global hotbed of financial innovation. Steve, an entrepreneur who’s launched 30 companies of his own, is also answering Mayor Walsh’s call to help make Boston the world’s innovation leader by 2030.
You can read the full article on the Bisnow website.
The Boston commercial real estate market continues northward with no signs of letting up. 222 Berkeley Street and 500 Boylston Street are set move in a record trade at over $1,150 per square foot.
From the Boston Globe:
The buildings total about 1.3 million square feet in size. A sale for $1.5 billion would put the price at nearly $1,150 per square foot, far higher than the selling prices of other commercial properties in Boston’s key business districts, which rarely top $700 per square foot…The Back Bay buildings are owned by a Blackstone subsidiary, Equity Office Properties, and share an underground parking garage. They are near the Public Garden, the Orange Line and commuter rail trains at Back Bay Station, and dozens of high-end retail shops.
No Boston isn’t ugly and as a matter of fact, it’s beautiful. Opinions are just that, opinions and each of us are allowed to express ours despite who it might offend.
Boston Magazine has a strong one, noting “the dirty little secret behind Boston’s building boom is that it’s profoundly banal—designed without any imagination, straight out of the box, built to please banks rather than people…Renderings of 30 Dalton show how its panel-and-glass motif will create a relentless gridded box of windows from floor to sky: Click, copy, and paste. A few weeks after 30 Dalton’s miniature arrived on the site, the backhoes arrived to carve a foundation out of what had been a parking lot. A few feet away, the old brownstones of St. Germain Street—the ghosts of Boston’s long-lost architectural ambitions—hunkered down in 19th-century resignation.”
We must, however, remind everyone that the office market today is vastly different from decades past. Today’s tenant wants floor to ceiling light with as many corners on each floor. 111 Huntington Avenue is one most sought after address’s in Back Bay with its efficient floor plates combined with abundant amenities.
The only space available is a sublease on the 5th floor, so from Boston Properties’ perspective, the building is fully leased.
Creative services firms are leading the charge into the Downtown market with their open floorplans. The Class A and B office landlords are renovating their buildings to accommodate this change. 745 Atlantic Avenue has done an amazing job creating a cool vibe once you enter the lobby and move through the common areas of the building. The new lobby give the feeling of an open loft combined with upmarket finishes. In addition, ownership combined a “media infused map” showing the history of innovation of our city.
From a Banker & Tradesman editorial:
Ad agency Arnold Worldwide’s move from Back Bay to 125,000 square feet in the former Filene’s building last summer was a milestone for the Downtown Crossing office market, where the 60-story Millennium Tower Boston condos are the most potent symbol of the city’s development boom…But the Financial District, which contains more than half of Boston’s 63 million square feet of office space, is undergoing its own post-recession transformation. Architects, digital media shops and tech companies are responsible for some of the biggest lease deals of the year.
Boston Rents continue its upward push with four office markets leading that charge: Back Bay, East Cambridge, Financial District and Seaport. The Class A market within Back Bay is clearly leading the way, while some value still exists within the Class B market. A real driver in the increased rents is the cost of tenant improvement dollars going from shell space to fix up space. Not uncommon to see those numbers north of $75 per square foot.
According to the BBJ, “the Back Bay’s average rents hovered over $60 last year [while]…Midtown New York commanded about $130 per square foot, and both San Francisco and Washington rents topped $75 per square foot.”
You can read the full article on the Boston Business Journal.
Office Vacancy and the Super bowl, the city with the highest vacancy rate wins.
REjournals compared Boston and Seattle’s office markets, citing a correlation between office vacancies and Super Bowl victories: “according to JLL, NFL teams based in cities with higher office vacancy rates have won the Lombardi Trophy 60 percent of the time in the past 15 seasons, including seven straight years from 2000 through 2006…This year, Boston’s office vacancy rate is 14.7 percent while Seattle’s is 10.7 percent. Based on this statistic, the odds favor New England.”
You can read the complete analysis on rejournals.com.
Downtown Boston is the largest concentration North of New York City and is in the midst of strong rent growth across the Class A and B segments. Today’s technology and creative services companies are looking for easy access to public transportation combined with an open floor plan.
From Banker & Tradesman:
For the third straight year in 2014, the Greater Boston office market recorded more than 2 million square feet of positive absorption, in a steady expansion that boosted occupancy rates at properties ranging from suburban office parks to converted warehouses and downtown high-rises.
“There’s more office product than ever and it’s getting filled in a much more dense way than ever before,” said Brendan Carroll, vice president of research for Avison Young. “If you’re wondering why the T seems more packed, or why you can’t get a cab to take you across the (Fort Point) Channel, that seems to be the reason.”