Boston Properties plans to dedicate an entire floor of its 200 Clarendon tower to amenity spaces in a planned renovation.
When I spotted an upcoming panel on the “Future of the Office,” at first glance it sounded like an oxymoron.
‘Future of the office?’ the grouchy skeptic in my head grumbled. ‘What future? Aren’t we all just supposed to work remotely and live happily after ever, the end?’
But to paraphrase Mark Twain, the demise of the office market has been greatly exaggerated.
Yes, big changes are coming in the work world, both in Boston and around the country.
But the office tower is here to stay, and, in fact may emerge stronger than ever as we ourselves emerge from our collective, pandemic-era funk.
Getting Clubby
That was the message that emerged from NAIOP Massachusetts’ State of the Office conference last Wednesday, held appropriately enough at the top of a tower next door to the TD Garden and North Station.
The event featured a panel discussion by some of the top office market executives and experts in the city.
What it was not, thankfully, was an exercise in fatuous happy talk about how everything is just fine and dandy, just please ignore the reality in front of your face.
Rather, the consensus was one of long-term optimism about the future of the office market, both in Boston and around the country, intermingled no doubt with some sophisticated spin as well.
Stripping it all down, though, one message came through loud and clear: It’s the best time in decades to be a company with offices in a top-shelf tower.
The big real estate investment firms really want to keep you, and they are ready to roll out the red carpet to convince you to stay.
Exhibit A is the Hancock Tower, where Boston Properties is taking over an entire floor at the 62-story tower and converting it into the “200 Club,” a riff on the tower’s official name, 200 Clarendon. (Sorry, I know the official name is 200 Clarendon, but it’s still the Hancock to me.)
The new amenities floor will feature a “spa-quality” fitness center and a lounge with baristas serving java in the morning, to be replaced by bartenders at night, among other attractions, according to David Provost, senior vice president of leasing at Boston Properties.
The club will also include large meeting rooms that companies can use for investor presentations, instead of having to rent out ballrooms at city hotels.
A planned $100 million repositioning of the International Place office-residential complex includes a 16,000-square-foot, tenants-only indoor-outdoor lounge and coworking space to be called The Aries Club, shown here in an architect’s rendering. Image courtesy of Gensler
Hundreds of Millions of Dollars
It won’t come cheap. Boston Properties spending millions on the work, Provost noted, adding, “it is money well spent.”
Boston Properties is making other upgrades as well, hiring an event planner and ensuring that fitness centers in Boston, San Francisco, New York and Washington, D.C. offer “spa quality” services.
The aim is to provide an experience that office workers aren’t going to get toiling remotely on their computer at home, he said.
In fact, fitness is a big draw.
“The first people coming back are coming back to work out,” Provost said. “It’s the things that people can’t get at home.”
Other tower owners are also getting into the act, said Lauren Hasson, vice president for workplace strategy at commercial real estate firm JLL.
One Post Office Square, a 1980s tower that whose hundreds of millions of dollars in renovations began before the pandemic, is also jumping headlong into the amenities game.
The tower’s amenity center is “absolutely best in class,” said Hasson, who has firsthand experience with it as JLL’s offices are located in the tower.
Hasson noted the center has a “fitness facility, golf simulator, low sensory rooms, salon/spa.”
One Financial Center, just across from South Station, is also upping its game as well, she noted.
The tower is rolling out a “frictionless cafe” in a lobby, which will offer fresh and healthy items that employees can grab and take back up to their offices in the high-rise.
And developer Don Chiofaro is pumping $100 million into the facade, lobby and common areas at Two International Place. Plans include a floor-sized amenity suite similar to the one planned for the Hancock Tower to help lure a new anchor tenant to replace Eaton Vance, itself soon to decamp for One Post Office Square.
Market’s Bottom ‘Not Functioning’
For tower owners looking to hang onto their tenants, one key is providing an array of services, from beauty salons and dry cleaners to popcorn machines, that make the office experience superior to the conveniences of working at home, such as being able to run out and do errands, she said.
“The bar is much higher, even though people are there much less,” Hasson said of the office. “We are embarking on a golden era of employee amenities.”
Still, all those upgrades cost money to make happen – millions on millions of dollars.
Scott Van Voorhis
But if owners of top-tier towers like Boston Properties can convince tenants to stay and reup on their leases, that certainly will save money that would be otherwise spent paying brokers to fill the space or staunching balance sheet bleeding from terminally empty floors.
And while the office market has taken a hit in the wake of the pandemic and the rise of remote work, the city’s most expensive and prestigious corporate addresses are holding their own, with rents having held steady, said Boston Properties’ Provost.
That’s in contrast to the older, class B office buildings at the lower end of the market, where rents have plunged and the future isn’t looking so bright right now.
“The upper end of the market is doing great, but the bottom 30 to 40 percent is just not functioning,” Provost said.
Scott Van Voorhis is Banker & Tradesman’s columnist; opinions expressed are his own. He may be reached at sbvanvoorhis@hotmail.com.
