Image courtesy of Perkins + Will
The pending reopening of a new observatory at the Prudential Tower is attracting widespread interest as Boston’s newest location for private events with commanding views, Boston Properties executives said.
“We’re absolutely ahead of schedule and it turned out beautiful,” said Bryan Koop, executive vice president for the firm’s Boston region. “We’re doing marketing tours with people who would like to look at events in the future. I’d say we’re oversubscribed on that.”
In a $125 million project, the office REIT is redeveloping the three top floors of the 1.2 million-square-foot skyscraper in Back Bay into a 59,000-square-foot observatory and event center designed to attract tourists and business travelers. The specific 2023 opening date still has not been announced.
The office REIT on Wednesday announced funds from operations of $292.9 million for the quarter ending Dec. 31, compared with $243 million in the same period in 2021.
In a conference call, Boston Properties executives said they are concentrating development efforts on preleased projects, including the $1.2 billion Kendall Square redevelopment in Cambridge, amid a downturn in office and lab leasing.
Executives did not discuss the future of another portion of the Prudential Center property, the 118,000-square-foot former Lord & Taylor store, but it will be replaced with a Dick’s Sporting Goods “House of Sports” store, the Boston Business Journal reported, with a potential opening date in spring 2024.
The 760 Boylston St. building has been vacant since 2020 following the bankruptcy of Lord & Taylor’s parent company.
Boston Properties’ portfolio concentration in class A office properties has helped it weather the steep downturn in leasing as company’s shed office space because of layoffs and hybrid work schedules.
“We are the first to acknowledge that the pool of clients and overall demand that we serve is unlikely to be growing their overall footprint in 2023,” President Douglas Linde said.
A major Cambridge development that began its permitting phase in 2016 is set to beginning in the first quarter. The Kendall Square redevelopment began recently with the demolition of the 1,136-space Blue Garage and will include a 570,000-square-foot office-lab building leased to Astrazeneca.
Boston Properties plans to begin construction of the Astrazeneca building early this year. The 37-story, 440-unit residential tower at 121 Broadway will likely break ground in 2024, CEO Owen Thomas said. The project also includes construction of an underground electrical substation for Eversource.
Boston Properties has “completed the necessary predevelopment hurdles” to begin construction of the first two buildings this year, Thomas said.
An existing tenant, Brammer Bio, has filed a lawsuit objecting to Boston Properties’ plans, claiming the redevelopment would disrupt its biomanufacturing operations. The company is seeking to remain at the property through 2032.
Thomas also highlighted additional development potential at the 2.2 million-square-foot Kendall Center property on Main Street, which has another 580,000 square feet of approved life science space.
But Boston Properties is taking a cautious approach to non-preleased lab space, which has become “a challenging market” as the life science industry feels the effects of declining investment, Linde said.
