John F. Hennessey (left) and Christopher A. McMahon of GVA Thompson Doyle Hennessey & Stevens stand in front of 300 A St. in Boston. The firm, which represents several properties in the Hub’s Seaport District, recently brokered the building’s first lease.
As an office market, Boston’s Fort Point Channel/Seaport District has had about as much luck in the new millennium as the region’s fishing fleet, with landlords tirelessly trolling for lease deals and netting little in return. But while the 4 million-square-foot submarket is the weakest in the Hub at the midyear point, industry observers insist the Seaport will land its share of tenants during the remainder of 2004.
“Activity has really picked up,” said broker John F. Hennessey, whose GVA Thompson Doyle Hennessey & Stevens is representing several office properties in the Seaport, including 300 A St., a one-time warehouse recently redeveloped on a speculative basis by Boston Wharf Co. The 6-story, 110,000-square-foot building just signed its first tenant, concierge support firm Circles, which will occupy 23,000 square feet when it moves in this September.
After a slow beginning to the year, tenant interest in the Seaport “went back on like a light” in late spring, said GVA Thompson broker Christopher A. McMahon, who is assisting Hennessey in marketing 300 A St. along with colleague James Griffin. Currently, McMahon said, tenant requirements representing three times the available space at 300 A St. are circulating about the building, yielding optimism that the property will be fully leased by year’s end.
Substantial progress also has been made at 303 Congress St., the new green-glass retail/office building sandwiched between the Summer and Congress Street bridges at the gateway to the Seaport District. Developer Stuart Pratt not only constructed 303 Congress St., he also moved his real estate services firm, NAI Hunneman Commercial Co., to the 6-story building last December. Hunneman is now close to leasing the final piece of space available in the 72,000-square-foot building, with such groups as the Casner & Edwards law firm and venture capital company CP Baker & Co. already in the building. Meanwhile, a new health club is taking the remaining retail space, with an opening slated for this autumn.
“We’re delighted,” NAI Hunneman Senior Vice President Jeffrey Becker said of the response to 303 Congress St. Leases are pending on the 12,500-square-foot sixth floor and a small penthouse space remaining, said Becker, concurring that the Seaport has seen an uptick of tenants pursuing deals since the spring. “If we gathered everybody who came by [303 Congress St.], we’d have to build a new building,” said Becker, who instead is helping other Seaport District landlords fill their properties. Having worked in and around the Fort Point Channel/Seaport market for the past 25 years, Becker has seen the district in various conditions, with strong cycles driving companies into fringe office sectors and weak markets sending business back to the core Financial District.
This time, however, Becker said the resurgence may finally stick in the Seaport, with the 385,000-square-foot lease extension recently signed by Thomson Financial in several Boston Wharf buildings helping ensure its long-term presence there. Thomson’s relatively young workforce and the addition of other like-minded firms is beginning to recapture the vibrant feel Fort Point Channel enjoyed in the past, Becker said, especially that seen during the brief technology boom.
A European Feel
The old-world nature of the district, which once served as the city’s prime manufacturing area, and a solid pedestrian layout have given the Seaport a European feel, said NAI Hunneman President Michael DiGiano, while Becker noted that the openings of the Ted Williams Tunnel to Logan International Airport and the Massachusetts Turnpike Extension have greatly improved accessibility to the north and west. Foreign firms and suburban companies once intimidated by Boston traffic are beginning to view the Seaport as one of the easiest places to access in the city, said Becker, further spurring demand. “We like it a lot,” DiGiano said of NAI Hunneman’s presence in the Seaport District, with access for its own employees improved by the recent move from downtown Boston.
Hennessey cited a close proximity to the city core as a key draw for 300 A St., with South Station and the Financial District a mere five-minute walk away. The gut rehab of 300 A St. also included installation of modern mechanical systems, elevators and a striking lobby that McMahon said was integral in securing the Circles commitment.
Boston Wharf is peddling turnkey space at $28 per square foot, said Hennessey, and has the added lure of its own garage right next door. Tenants are being offered a discount monthly parking rate, said Hennessey, while natural lighting from extensive window lines and efficient layouts are also seen as pluses at 300 A St. Jung Brannen served as architect for the renovation, with Turner Construction doing the actual work. “It’s really a brand new building,” said Hennessey.
Tenant interest for 300 A St. and the Seaport District in general has come both from within the area and even out to the suburbs, according to those tracking recent trends. Boston Medical Center has a need for more than 60,000 square feet for a division currently located in the Seaport’s Design Center complex, with sources reporting that the entity is taking a hard look at staying within the area. Circles is migrating from the nearby Children’s Museum building a few blocks away from 300 A St., while McMahon said other prospects include a Bedford company and another located in Newton who reportedly consider the Seaport a strong area to attract and retain employees.
DiGiano declined comment on rumors that his firm has been retained by Boston Medical Center to pursue its deal, but industry sources insisted NAI Hunneman is taking the lead on that sizeable space search.
Even with the recent boost, the Seaport District has yet to return to the heady days of 2000 and 2001. According to figures released last week by Spaulding & Slye Colliers, the Seaport posted negative absorption of 38,000 square feet in the second quarter, bringing the vacancy rate to 17.5 percent and the availability mark to 19.1 percent. The latter figure includes sublease space available for rent, while the vacancy rate only reflects direct space. Both the vacancy and availability rates were higher in the Seaport than in any other office submarket in Boston, and their showings also surpassed the city’s overall totals of 12.3 percent vacancy and 17.5 percent availability.
Conditions have been so dour in the Seaport that one office property was recently taken back by its lender, with 451 D St. surrendered by Yale Properties to its German financial backer. The hulking asset is reportedly being eyed for alternative uses, including a hotel and residential conversion, with some maintaining that the lengthy office market recovery will be too extended to allow 451 D St. to continue operating in that arena.
The 451 D St. building is located outside the core Fort Point Channel area, limiting its exposure to public transit and amenities such as retail and restaurants. A few blocks away, however, the World Trade Center complex has made great strides in recent months to service a flood of employees coming to three new buildings developed in the past few years. Those amenities have made a big difference in attracting tenants to the area in recent years, including established firms such as AEW, Foley Hoag LLP and Nutter McClennan & Fish. Only a fraction of more than 1 million square feet of space at the World Trade Center East and World Trade Center West buildings is available for lease, said Spaulding & Slye Colliers principal Debra J. Gould, whose firm handled leasing of the two towers. “They really hit the market right,” said Gould, adding she believes that the rest of the Seaport District also will begin to stabilize in the coming months.
