Gone are the days when tenants would start looking for Boston office space one-to-two years in advance. Prospective tenants now find themselves shopping for immediate occupancy, and are only interested in spec suites that have been prebuilt by the landlord to meet today’s connectivity demands.
Tech has dominated the ongoing positive cycle in Boston’s office market, and the industry’s reputation as a disruptor has extended into how landlords appeal to potential tenants. While law firms and financial firms are known for making space decisions far in advance, the tech community has compressed the time from site tour to move-in…Their growth is more explosive than a bank or insurance company; thus, they wait until the last minute.
As life science firms turned Cambridge into a lab-dominant market, the historically tech-heavy Kendall Square passed its tech reputation across the river into areas like Boston’s Fort Point and Seaport neighborhoods.
Credit: Boston Real Estate Times
What will the Dunkin’-of-the-future near your office look like?
According to the Boston Real Estate Times, you can get a glimpse at “588 Washington Street in Quincy, Massachusetts [which] offers the first look at the brand’s U.S. store of the future experience, with a modern atmosphere and new and innovative technologies and design elements — including the first drive-thru exclusively for mobile ordering.”
New Dunkin’ locations will including the following elements:
- Modern, Energy-efficient Design
- Mobile Drive-Thru
- Cold beverage taps
- Digital kiosks
- Healthy menu additions (ie. fresh fruit, yogurt parfaits, nut butter packs, etc.)
You can read more on the new Dunkin’ experience at the Boston Real Estate Times.
Credit: Commercial Cafe
Boston has strong fundamentals and looks for increased rent growth in 2018.
Here’s a 2017 Assessment from Commercial Cafe:
Boston averaged between 11% and 12% office vacancy in 2017. Desirable tech submarkets are priced at a premium here, while emerging submarkets often offer discounts–the overall average asking rent in tech submarkets is priced at a 16% premium in East Cambridge (where inventory has decreased).
The Boston market also retained positive absorption, as vacancy dropped 0.4 percentage points to 12.0 percent last year. Large tenant move-ins have driven the 2017 Boston CBD market, with major shifts including Natixis Global Asset Management’s move into its new 150,000-square-foot headquarters at 888 Boylston St. in the Back Bay.
What are some of the most notable office landlords, like Boston Properties, doing to address the growth of the co-working segment that is being championed by WeWork?
“Our point of view is we’re pretty maniacally focused on our customer, and our sweet spot has been this long and strong customer: long-term leases, strong credit,” [Boston Properties Executive Vice President Bryan Koop] said. “As we continue to focus on that, there will be changes in how we work with them.”
Boston’s surging real estate cycle is driven by tech, both by traditional technology tenants like Rapid7 as well as companies with an increased digital presence like General Electric. With every company increasingly thinking of themselves as a tech company, plug-and-play connectivity and less lag time between lease signing and move-in are rising expectations, forcing landlords to take a more active role in their tenant experience.
Traffic in and out of Boston is going to look a little different if Amazon HQ2 comes to town. Boston Harbor could host the seaplane shuttle to New York and other future destinations to help alleviate the added burden.
Credit: Boston Herald
From the Boston Herald:
Boston and Somerville were identified together by Amazon last week, though they bid separately on hosting HQ2, which could cost $5 billion and bring 50,000 new jobs. The bids identify numerous perks and benefits for the company, with Boston promising seaplane service if it is selected.
“Establishing seaplane operations in the Boston Harbor will provide scheduled service between Boston and New York City, providing additional means of transportation between these two major metropolitan areas (in addition to bus, train, and air),” the bid reads. “There has been considerable collaboration to date with government agencies on the feasibility and implementation of this service.”
We too can play at that game! That sentiment is being echoed by landlord’s and is resulting in upping the ante game within Class A towers and Class B midrises. Landlords across the spectrum are looking at where they can add amenities in what has traditionally been poor-performing or unleaseable space.
Companies in every industry, from autos to retail, have been scrambling to adjust to millennials’ tastes and expectations, and commercial real estate is no exception…big landlords are spending millions to inject Silicon Valley playfulness into aging towers in big cities. They’re in an arms race against new construction and co-working businesses such as WeWork Cos. “The way towers were built in the 1980s, they were a monument to the corporation,” says Lisa Picard, chief executive officer and president of Equity Office, a Blackstone unit that owns office buildings. “Now, if it feels corporate, that’s the kiss of death.”
Credit: Boston Business Journal
What does the shorter Winthrop Square tower now look like?
According to the Boston Business Journal, the refined Winthrop Square tower will include the following:
- 500 residential units;
- 750,000 square feet of office space;
- 21,000 square feet of publicly accessible meeting space;
- 21,000 square feet of restaurant/retail space;
- 115,000 square feet of affordable housing that could be built in Chinatown in collaboration with the
- Asian Community Development Corp.;
- Two exterior green roof spaces; and
- Capacity for 550 vehicles in five levels of underground parking.
The update follows an ongoing discussion around the impact of the shadows cast onto the Boston Common given the tower’s height, orientation, and location.
Class A landlords are continuing to update and upgrade their assets to address the evolving needs of today’s tenant. The 402-foot, 41-story Class A tower at One Post Office Square was built in 1981 and is 832,000 rentable square feet with a typical floor plate of 18,221 square feet.
Credit: Banker and Tradesman
A recent Banker and Tradesman article speaks to the proposed transformation, noting the office “tower in Boston’s Financial District will get a new glass facade, a roof deck and terraces and an illuminated rooftop glass “lantern”…On the lower levels, a three-story glass pavilion will add 52,100 square feet of retail space and an 8,800-square-foot restaurant…An 18-story addition replacing the existing garage on Oliver Street would [also] contain automated parking and additional office space.”
Click on the link for additional information on the One Post Office Square renovation on B&T’s website.
Ferry service in Boston Harbor is looking to add new destinations.
According to Banker and Tradesman, “at public meetings during the summer, many attendees requested more inner harbor service…[while] outside of Boston, the report recommended expanding commuter ferry service from Hingham, Hull, Lynn, Quincy, Salem and Winthrop and starting a new service from Dorchester’s Columbia Point.”
The goal is to begin expanded service in 2019.
For additional information, continue on to Bander and Tradesman’s website to read its complete coverage.
Credit: Boston Globe
The Seaport is poised to get a library, but let’s wait to see if it materializes in Boston’s booming commercial real estate sector.
From the Boston Globe:
[State Representative Nick] Collins, a Democrat who represents South Boston, is among those who have complained that the burgeoning district is being built without enough of the places — like a library — that make a neighborhood feel like home. As WS Development finalized plans to put housing, office buildings, and retail on 12.5 acres of parking lots, Collins pressed the developer to add a library to the project, known as Seaport Square.
But when the Boston Planning & Development Agency approved the developer’s plan Nov. 16, it required two performing arts centers, but no library. That same week, however, Collins inserted a provision into a large state bond bill that would set aside $10 million for “creation and construction of a Boston Public Library branch on the South Boston Waterfront.”