What’s to come in Boston Development?

Currently there are five major office projects totaling 1.67 million square feet under construction across Boston. With an average age of 30 years old, Boston’s aging towers do not always meet the requirements of today’s modern tenants. Construction methods have advanced significantly over the past 20 years and today’s buildings are much more conducive to open floorplans and collaborative environments. As a result, new construction is more efficient and although tenants pay a premium, they are often able to consolidate into 75-80% of their existing square footage.

Most recently, Converse opened its new global headquarters at Lovejoy Wharf while a similar renovation project for LogMeIn continued at 333 Summer Street in the Seaport, interestingly enough both separate ownership groups have placed the brick & beam office buildings on the investment sales block. While the residential Millennium Tower continues rising in the heart of Downtown, other large mixed-use projects including Related Beal’s Congress Square, HYM Investment’s Government Center, Boston Properties’ Causeway Street and the Winthrop Square Garage are all poised to commence and will collectively transform today’s Financial District.

The Seaport remained active with Goodwin Procter and PWC’s build-to-suit towers simultaneously nearing completion. Recent market rumors suggest that both Skanska and Tishman Speyer will break ground on speculative developments at 121 Seaport Boulevard and Pier 4 respectively by year’s end. These projects would join 1325 Boylston Street as Boston’s first speculative developments since the recession. Tenants are actively touring 1325 Boylston Street and ownership recently secured current Cambridge tenant, CRICO, to a 31,200 SF lease.

Several other projects continued across Boston, with New Balance’s new headquarters taking shape and 888 Boylston Street receiving commitments from a handful of financial service firms. Overall, the forecast remains bright for Boston’s development market, however rising construction costs and land scarcity are setting strict barriers-to-entry and heightened competition.

Over the past 18 months over 2.4 million square feet of commercial office and lab space have delivered across Greater Boston and nearly 5.7 million square feet are actively under construction. Over 90% of the space was build-to-suit construction for a host of pharmaceutical, life science, creative and traditional FIRE firms. However, recent leasing velocity and an overall vacancy rate approaching 10% across Eastern Massachusetts has developers thinking speculatively.

Market rumors suggest DivcoWest will likely close on the 44-acre Northpoint project by the conclusion of July. The oft embattled development can still accommodate up to 5.0 million square feet of mixed-use urban development, providing a much needed relief valve for the overflowing East Cambridge submarket. Besides this location, the only “available” development site is the GSA’s 14 acre Volpe Center which awaits a lengthy RFP process and whose time frame remains cloudy.

Earlier this spring, Alexandria RE secured Genzyme to a 251,000 square feet lease at 50 Binney Street which will be ready for 950 employees by 2018. More recently, the life science development specialist revealed that Bristol-Myers Squibb will occupy the abutting 100 Binney Street where the drug manufacturer will focus on new drug development and testing. Other notable build-to-suit projects nearing completion are Novartis and Ariad Pharmaceuticals both of which will be completed by the end of the year.

In the suburbs, Trip Advisor’s new 280,000 square foot headquarters at 400 First Avenue in Needham was recently completed and sold to US Realty Advisors for an impressive $475 per square foot. Meanwhile, as Vistaprint’s soon to be delivered headquarters approaches the finish line, watch for Hobbs Brooks to test the investment sale market. Also in Waltham, developers at 1265 Main Street recently signed Clarks America to a 120,000 square foot lease at the transient focused mixed-use development at the former Polaroid location.

Closer to the city, Federal Realty’s Assembly Row project in Somerville continues moving forward on Partners Healthcare’s 700,000 square foot requirement which now rises high above the former parking field. Looking forward, extremely strong tenant demand for modern, efficient space will support additional development across eastern Massachusetts.

 

Entire overview can be viewed by clicking here.

http://www.lpcboston.com/email/Q2%20Development%20Pages.pdf