Intercontinental Cos., owner of The Causeway, a former warehouse recently converted into a mixed-use facility at 226 Causeway St. in Boston, is reportedly angling to lease a portion of the facility to the Democratic National Committee as a temporary headquarters in the months leading up to the July 2004 Democratic National Convention in the Hub.
It has hardly been the best of times for Boston office landlords, but it appears momentum is shifting to the good for at least one Hub property. According to industry sources, accounting giant Grant Thornton has agreed to lease nearly 35,000 square feet at 226 Causeway St., while the building’s ownership is also said to be chasing the bid as convention headquarters for the Democratic National Committee.
Calls to the Intercontinental Cos., owners of 226 Causeway St., were not returned by Banker & Tradesman’s press deadline, but sources claimed that Grant Thornton has secured its decision to relocate to the property from its current home at nearby 98 North Washington St. Banker & Tradesman first reported in October that the two sides had agreed in principal to a lease, and it appears that deal has finally been cemented. Meanwhile, one source said Intercontinental is “very serious” about the Democratic National Committee lease requirement, which is needed as part of the July 2004 Democratic National Convention that will be held in Boston.
“They are going after it,” said the source, while acknowledging that the current office market woes in Boston will likely spur other landlords to chase the lease. Nonetheless, 226 Causeway St. would certainly seem to have an advantage in location compared to many competitors, given that the building is just a few steps away from the FleetCenter, which will serve as the main forum for the convention.
DNC spokesman Michael Meehan said last week that there are two requirements being sought, with the smaller of the two running about nine months to a year before the convention and the larger need within a month of the event. The additional space will be needed to accommodate various media outlets and other ancillary requirements, said Meehan, who added that the committee has yet to determine exactly how much space will be needed.
Meehan did say that the committee expects to rely heavily on the host Boston 2004 committee to identify potential office space and to work out a contract, although the immediate focus has been on finding the necessary hotel rooms. “We will look to the people in Boston to help identify the space over the next couple of months,” said Meehan.
By current estimates, some 35,000 people are expected to flood into Boston for the convention, with the city last month finalizing its winning bid. There is an estimated $150 million economic impact for the host city of the convention, although several million dollars must also be spent for security and other expenses. Those costs could be even higher in the wake of the Sept. 11, 2001, terrorist attacks.
Headed North
For the most part, the DNC itself will lease the space for media organizations and other entities, but some observers say they hope there will be other short-term lease requirements generated by the convention, as well. Among the local landlords who said they anticipate other short-term leases to emanate from the convention is Michael Grill, whose Fairlane Properties owns the 98 North Washington St. property. Grill was unavailable last week to discuss whether his firm is planning to pursue the DNC as a leasing alternative, or whether his company has been approached by committee officials.
In any event, the Grant Thornton deal should be a boost for 226 Causeway St., and does represent a modicum of expansion for the firm, a rarity in the currently austere economic climate. The accounting firm had outgrown its space at 98 North Washington St., where it occupies approximately 24,000 square feet. Efforts to contact Grant Thornton officials by press deadline were unsuccessful.
While it will do little to change the North Station market fundamentals, the lease does help to kick off 2003 on a positive note. Although it has outperformed most other Boston office submarkets, North Station did have a difficult fourth quarter. Spaulding & Slye Colliers estimates there was 44,000 square feet of negative absorption in North Station in the final three months, giving that area an 8.5 percent vacancy rate and 12.2 percent availability rate at year-end 2002.
Also unavailable last week was John Barry, a principal with Richards Barry Joyce & Partners, the leasing brokers for the 226 Causeway St. project. Barry and partner Michael Joyce are heading up the leasing assignment there, and helped to negotiate the Grant Thornton lease. Details in terms of rental rate and length of the lease were unavailable.
The Grant Thornton lease and the DNC possibilities come just as Intercontinental wraps up its extensive overhaul of 226 Causeway St. into a mixed-use complex at what will ultimately be the gateway to Boston from the north. The $90 million overhaul included the addition of six floors to the top of the former warehouse. Being dubbed The Causeway, the building includes 108 luxury apartment units and ground-floor retail space.
As for the DNC situation, Meehan said there is no current timetable for when a final decision will be made on the location of the temporary party headquarters. “I imagine we’ll have a better idea by the spring,” said Meehan, although he added that Boston 2004 officials have indicated they may house some of the operations at the new Boston Convention and Exhibition Center nearing completion in South Boston.
