| Boston Office
The greater Boston corporate real estate market is showing
signs of recovery after being affected by the slow economy.
Asking rents have leveled off and are slowly beginning to
rise. Net absorption within the market is also increasing,
according to John Drew, president of Boston-based Seaport
Though new developments are not occurring in Bostons
Financial District right now, they are taking place in South
Boston Seaport District and other areas around Boston Harbor.
The majority of undeveloped land in Boston is located
in the South Boston Seaport and is attracting new mixed-use
developments as well as new hotels and condominiums,
says Drew. Other neighborhoods, including Charlestown and
the North End, are seeing new housing units and mixed-use
developments under construction. Gale, a new developer in
the Boston area, has recently completed the development, lease
and sale of One Lincoln Street in Boston. State Street Financial
Center, in downtown Boston, is a 36-story, 1 million-square-foot
Class A office building. The property, designed by Jung|Brannen
Associates, spans 465 feet and is comprised of dramatic exterior
grey granite, matching pre-cast panels and a striking aluminum
and glass curtain-wall.
Even with the good news of recovery, there is the reality
that no new office development projects in Boston are immediately
ready to move forward.
In reality, we are not going to see an office tower
slated for occupancy in Boston for 5 years, even under the
best conditions, says Robert Fitzgerald Jr., executive
vice president/principal of Boston-based NAI Hunneman.
The lack of new developments in the near future is a positive
sign for the market because any current growth has to be handled
by existing projects. With an office vacancy rate of 17.3
percent in the first quarter of this year, the greater Boston
area has room to grow. Down from 19.1 percent at the end of
2003, the vacancy rate has decreased due to new business moving
The development projects currently being proposed are uncertain.
Uncertainty has been and will be the buzz
word for a time in the area, says Fitzgerald. I
believe that we are in a stagnant period for office growth
right now and we will remain in this state for at least the
next 12 to 18 months.
Additional major projects that are on the drawing board include
Delaware Norths North Station and Fan Pier, the Pritzker
site in Bostons Seaport District. Boston Garden Development
Corporation has submitted a proposal to the Boston Redevelopment
Authority outlining a plan to build a 37-story, 368-unit residential
tower at North Station. The $150 million proposal includes
plans for a 415-foot-tall tower on Nashua Street called the
Nashua Street Residences.
According to Charlie Jacobs, executive vice president of the
FleetCenter and the Boston Bruins, Delaware North also has
plans for two additional towers at the site for office, retail
and hotel uses. The entire development will total 2 million
square feet. The premier 577,000-square-foot tower is planned
solely for residential use and will be completed in 2007.
The Pritzker family is selling Fan Pier, a 20-acre waterfront
site in Boston. The parcel is fully permitted for 1.1 million
square feet of residential development; 1.2 million square
feet of office development; 140,000 square feet of ground-floor
retail, restaurants and cafés; a 500- to 650-room hotel;
and 107,000 square feet of civic and cultural space, including
space for the Institute of Contemporary Art.
Class A rental rates range between the low $30s and the upper
$40s per square foot; however, the downtown Boston vacancy
rate has held steady at approximately 12 percent.
According to Fitzgerald, Bostons Seaport District is
the area to watch for future growth. Because it has become
one of the most easily accessible spots from all directions,
Boston will see most of its new significant development projects
and growth in this area in the coming years.
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