Boston Relishes Status as Hot Spot for Tech, Life Science Firms
The Boston office market continues to see established out-of-market tech users from a diverse group of industries take large blocks of space. In the Seaport District, Aptiv, a division of the car technology company Delphi Technologies, took 93,000 sq. ft. at 100 Northern Avenue. In the central business district, Spotify, a digital music service company, opened its first Boston location and leased 73,000 sq. ft. at Center Plaza.
Verizon’s Oath, the digital publishing arm of the company, inked a 440,000 sq. ft. lease at North Station’s The Hub. And Bose, a consumer electronic products company, recently took the remaining available space at Boston Landing, bringing its leasing total to 145,000 sq. ft. at the project. The diversity of this new crop of tech entrants into the market solidifies the strength of Boston’s growing technology cluster.
In a city once dominated by financial service and insurance firms, Boston is now home to a world-class entrepreneurial ecosystem. This is important as established companies across industries race to innovate in the digital age. The juxtaposition of Fortune 500 companies such as Optum and Amazon next door to newly funded and rapidly expanding home-grown startups such as Draft Kings and Toast makes this a dynamic and exciting time for real estate investors in the city.
Boston’s “new economy” is driving the demand for space. As a result, the vacancy and availability rates, currently at 7.6 percent and 12.1 percent respectively, are near historic lows. Space is tight and demand remains particularly high for large blocks of space (50,000 sq. ft. or more). Thus, creative new developments have been crucial for Boston to retain opportunities for tenants looking to enter the market or to relocate as their existing leases expire.
Projects such as Winthrop Center, which MP Boston is developing, will provide up to 750,000 sq. ft. of brand-new innovative office space in the epicenter of the city for the first time in over a decade. The project will give users currently in Boston — or new to the market — the opportunity to be in new construction with access to all the major transportation lines within blocks of their front door. With talent recruitment a top priority for companies, access to transportation along with building and neighborhood amenities are increasingly key real estate decision factors.
Price is right for tenants
Life science companies, which have traditionally anchored themselves close to academic institutions, are also relocating to or expanding in Boston. Seeking relief from the high rents and space constraints of East Cambridge, they have found Boston a suitable alternative. The Seaport District has become a burgeoning life science cluster. Alexion, Vertex, Ginkgo Bioworks and 908 Devices are examples of lab tenants that have elected to anchor their headquarters there.
As a result, many landlords are in the process of delivering lab-ready buildings, or are poised to do so, in order to capture this growing demand. Designed as a flex building, 645 Summer Street is now being converted to a full lab-ready building. With over 50 percent of the building committed prior to delivery, the market has responded favorably.
The talent-rich, world-class educational institutions provide the region with a yearly influx of well-educated employees. The current growth of Boston’s tech and life science clusters coupled with increasing industry diversification is expected to continue through the remainder of this year.