Commercial real estate in the area around Boston’s North Station is beginning to rebound after several years of struggles.
It’s happening in small steps, but the area around North Station seems to be pulling out of the funk that started taking hold after the recession at the beginning of this decade.
“[2005] was really, really good,” said Karyn McFarland, owner of Boston-based real estate firm McFarland & Finch and the president of the Downtown North Association.
Numbers from Spaulding & Slye show that the area’s net absorption at the end of the year towered over most comparable markets, with only the Back Bay area and the Financial District seeing more square feet absorbed in 2005. The North Station area had 345,618 square feet absorbed, while the South Boston waterfront saw less than half of that and Charlestown saw about 35,000 square feet absorbed.
According to McFarland, the 2004 vacancy rate was 12.5 percent and the rental rate was $23.34 per square foot for the Bulfinch Triangle buildings that her firm tracks. In 2005, the vacancy rate dropped to 9.8 percent and the per-square-foot rental rate rose to $24.64.
“That’s a really significant improvement,” she said.
The vacancy rate in the North Station-area buildings tracked by Spaulding & Slye rose sharply from 2000 to 2001 from 0.6 percent to 7.7 percent. It saw another big jump from 2002 to 2003, when it rose from 8.3 percent to 15.2 percent. But since then the vacancy rate has slowly decreased, landing at 14.2 percent in the last quarter of 2005.
One of the major reasons for the increased interest in the area has been that the changes caused by moving the Central Artery underground are finally visible, McFarland said.
‘So Different’
“The whole place is transforming,” said Richard Bertram, an architect with Boston-based CBT/Childs Bertram Tseckares, which is working on a new development in the Bulfinch Triangle.
Bertram’s office is also in the area, and since the elevated Green Line tracks were demolished, the neighborhood has had a different, more open feel, he said.
That demolition and other developments have allowed people to see the changes, McFarland said.
“People want to be where the action is,” she noted.
Now the area – which has always been popular with engineering and architecture firms – is attracting publishing companies and law firms that want to be near the neighborhood’s new courthouse. And although the North Station area has never competed with Cambridge, the types of industries found in each of the areas are becoming more similar.
“It’s the creative types,” McFarland said.
The 24-hour feel of the neighborhood – with the TD Banknorth Garden and the local pubs – is also attracting young firms trying to recruit employees. Higher gas prices may also have prompted more interest in the area, since North Station is a hub for the MBTA’s subway system and commuter rail. Firms that have been in the area for years are renewing their leases, and new companies are coming into the area, McFarland said.
Among the bigger deals in an area that usually attracts small companies were the leasing of almost 14,000 square feet at 77 North Washington St. by Baseline Communications and the leasing of 7,300 square feet at 200 Portland St. by Animation Technologies.
McFarland said she expects the future of the North Station area to be even brighter. The improvements to Causeway Street are scheduled for completion by the middle of this year, and developments including retail, residences and offices are slated for a five-acre parcel held by the MBTA and the Massachusetts Turnpike Authority.
One such development on a single-acre parcel bounded by Causeway Street, Haverhill Street, Valenti Way and Beverly Street will feature 243 rental apartments, 137 parking spots and 17,000 square feet of retail space. The Turnpike Authority, which holds the land, recently announced it is designating Denver-based Simpson Housing Limited Partnership as the developer. Fifteen percent of the rental units in the 10-story building will be set aside for affordable housing, according to the State House New Service.
Bertram is working on a similar development that will have some ground-floor retail space and a market on the second floor. His firm also is proposing a monument to the canal that was once located where Canal Street now stands, featuring a water-filled “canal” on the fronts of some buildings on the street that would eventually empty into a fountain.
“It’s going to look so different,” McFarland said.
She added that she expects to see increases in rental values over the next few years, along with steady growth, and the vacancy rate continuing to drop in the neighborhood.
“[The North Station area is] only going to get better,” she said.
