Boston's 1.2 million-square-foot One Post Office Square is being renovated by owners Anchor Line Partners and Morgan Stanley. Photo by James Sanna | Banker & Tradesman Staff

Boston investment firm Eaton Vance is leasing a significant chunk of the One Post Office Square tower currently under renovation, but will be shrinking its footprint when it moves from its current home at International Place.

The company did not respond to a request for comment from Banker & Tradesman as of publication time, but the Boston Globe reports the company will take between 250,000 and 275,000, down from the 325,000 it leases at Two International Place.

Bisnow first reported the company’s intent to lease space at One Post Office square earlier this month, but an official lease was not signed until recently.

Eaton Vance’s parent company, Morgan Stanley, owns a 50 percent stake in the tower.

The deal provides good news for the downtown Boston office market, said Tucker White, director of research at Hunneman, at a time when many landlords are watching and waiting to see what direction the market takes.

“[One Post Office Square] has been looming over the market,” he said of the 1.2 million-square-foot tower.

Morgan Stanley and co-owner Anchor Line Partners are spending $300 million on to reskin and overhaul the 1981 building.

Eaton Vance’s decision is in line with other financial firms’ moves, even before the pandemic, White said. Thanks to new technology and automation of back-office processes, many Boston firms have slowly been shrinking their footprint, and average floor space per employee has shrunk from over 200 square feet eight years ago to between 150 and 180 square feet.

The fact that Eaton Vance did not slash its downtown presence dramatically could even be read as a win, said McCall & Almy Executive Vice President Garrett Larivee.

“It’s a ‘right back at-cha’ for everyone who says the office space is dead,” he said. It’s telling you that the office is not going anywhere but it’s going to be different.”

Despite predictions early in the pandemic that downtowns would see major weaknesses, many downtown employers haven’t been shifting their footprint towards the suburbs or opening satellite offices to be closer to workers who live further out, he said, largely because of the disruptions that would cause to employees’ commutes.

“People based downtown have been hiring from the North Shore, the South Shore, west of Boston, and as soon as you move to the suburbs, you’re going to make it different for some group of people,” he said.

While the overall vacancy rate has gone up – Newmark research put the figure at 13.8 percent for the 33 million-square-foot downtown market in the third quarter, compared to 13.8 percent in the Seaport and 8 percent in the Back Bay – the sublease market is stabilizing, Hunneman’s White said and life science conversions of office buildings in places like Fort Point are taking some space off the market. Class A rents are also holding steady thanks to institutional investors’ persistence and a belief that office tenants will want to relocate into nicer buildings over the next few years, if given the opportunity.

While current vacancy rates are higher than pre-pandemic norms, Larivee said, neither current vacancies nor the wave of new space coming online thanks to projects like One Post Office Square, Millennium Partners’ Winthrop Center or HYM’s One Congress pose a threat to the market’s long-term health.

“When you look at where we were and where we still are from a vacancy perspective and what new construction is coming online, it will take longer to absorb that than pre-COVID, but I wouldn’t say it’s an alarming amount. It’s not going to be this albatross on the market,” he said.