Wednesday Jan 16, 2013 by Ashley Lane - Director of Research, Cassidy Turley
In the past 13 years, the topography of greater Boston’s commercial tenant landscape has shifted significantly. In 2000, corporate campuses were king and rapidly expanding tech companies were leasing space along Route 128 faster than they could fill it. Employees wanted to work close to where they lived – in the suburbs. And suburban rents reflected this demand – thirteen years ago they were, on average, 30% higher than they are today.
In little more than a decade, demand for space along Route 128 has been trumped by East Cambridge and the Seaport, especially in the past year. Mostly because employees still want to work close to where they live – but now it’s in the city. Today’s start-up and innovation employees don’t want to own a car or sit in traffic – just to get to work. They want to be a $10.00 dollar cab ride from their offices – where there are on-site amenities and dining and entertainment options within walking distance.
The story of the past 18 months has been the migration of companies from East Cambridge - where limited availability and skyrocketing rents are squeezing out the region’s youngest firms - to Boston’s Seaport district. However, as a victim of its own success, rents in the Seaport continue to climb. At $54.00 per square foot for class A space, they are now on par with class A asking rents in Back Bay.
So in the coming year, we will be watching to see if PayPal (with its move into the 5th and 6th floors of One International Place) and Technip (with its relocation from East Cambridge to One Financial Center) will be trendsetters for other technology and innovation firms in 2013. Conducive to the office-less collaborative spaces sought by these companies, asking rents on low rise space in the Financial District are currently more than 45% lower than on higher floors and 20% lower than current rents in the Seaport.