Karyn McFarland, president of McFarland & Finch in Boston’s North Station area, says her firm has “done a ton of leasing this year.” She is shown above in front of 77 North Washington St. in Boston, one of the properties her firm represents.
It may be too early to declare a total recovery of Boston’s office market, but improvements seen of late in the core Financial District do finally appear to be extending outward, as evidenced by brisk activity in such fringe areas as Charlestown, North Station and Fort Point Channel.
“We’ve done a ton of leasing this year,” said Karyn McFarland, president of McFarland & Finch in North Station, where she represents such assets as 98 North Washington St., 239 Causeway St. and 77 North Washington St., best known to locals as the erstwhile home of the Scotch ‘n Sirloin restaurant. The eatery’s departure in the early 1990s is one of the few changes seen on 77 North Washington St.’s tenant roster, said McFarland, who recently renewed two longtime occupants in Flansburgh Assoc. and Finegold Alexander + Assoc., both architectural firms.
“You really need a crowbar to get companies out of that building,” said McFarland, who has just one retail block and less than 5,000 square feet of office space available directly in the 120,000-square-foot building, although the defection of venerable tome Atlantic Monthly magazine to Washington, D.C., did open up a floor of sublease space in the 9-story building, space that McFarland is marketing on behalf of the publication.
Besides encouraging interest in Atlantic Monthly’s 14,000 square feet, existing tenant Get Connected has taken another full floor in the building, doubling its space to nearly 28,000 square feet and mimicking similar growth by fellow tenant Baseline Communications. Meanwhile, Financial Media Holding Group is said to be taking another 3,500 square feet. McFarland would not discuss the status of that deal, but concurred that Get Connected has agreed to an expansion.
“The building has great character,” McFarland said, citing attractions such as exposed brick, arched terra cotta ceilings and large windows that appeal to creative types. But she stressed that the lure extends beyond that building’s physical charm to the entire North Station district, which McFarland also represents as president of the Downtown North Business Association.
‘A Whole Different Feel’
Once scarred by the Central Artery and an equally imposing overhead trolley line, the vibrancy of North Station has returned in the wake of the $15 billion Big Dig project, maintained McFarland, who has had a front-row seat to the evolving landscape. The physical improvements borne of that venture and the promise of new green space and residential opportunities have solidified North Station as a destination for companies in Boston and beyond, she said. New buildings being planned on the site of the dismantled artery will draw new retail and restaurants into the submarket, said McFarland, who also noted that the area is well served by public transportation.
“It is becoming an easy place to recruit young people thanks to the [access] and because there’s so much going on here,” said McFarland. “After 6 o’clock at night, it has a whole different feel from what you get in the Financial District Â… There’s always something happening no matter how late it is.”
Whatever the reason, North Station does seem to be rebounding from a difficult stretch encountered to begin the new millennium. According to first-quarter figures compiled by Spaulding & Slye, the 3.06 million-square-foot submarket had slight positive absorption of 11,000 square feet. North Station’s 14.2 percent vacancy rate is second highest of the six districts in the city monitored by Spaulding & Slye behind the 14.6 percent level in Charlestown, but is nearly half what it was as recently as 2004. Charlestown, meanwhile, was also positive on absorption in the opening three months of 2006 with a 49,000-square-foot gain, the strongest results citywide save for 205,000 square feet of positive absorption in the Financial District.
Also faring well at the outset of 2006 was the Seaport District that includes Fort Point Channel. The emerging submarket had 42,000 square feet of positive absorption to drop the vacancy rate to 12.6 percent, while available sublease space in that area has fallen under 600,000 square feet after being a major source of problems from the technology crash of 2001.
“It’s booming again,” GVA Thompson Doyle Hennessey & Stevens Vice President Christopher McMahon said of the Seaport District where his firm recently assisted the Boston Beer Co. in relocating its headquarters. Among the largest leases locally during the first quarter, the maker of Samuel Adams beer took more than 30,000 square feet at the Boston Design Center, complementing a 28,000-square-foot agreement signed by Bergmeyer Assoc. at nearby 51 Sleeper St.
One catalyst for growth in the Seaport District has been the pending renovation of Russia Wharf at the gateway to the submarket. Owned by Equity Office Properties, the three-building complex is being emptied out in advance of the project, forcing longtime tenants to consider alternate locations. Those plans prompted Elkus/Manfredi Architects to move to 300 A St. in Fort Point Channel last year, and was the catalyst behind Bergmeyer’s lease at 51 Sleeper St., a 150,000-square-foot office building owned by the Mayo Group. Represented by NAI Hunneman Commercial Co., 51 Sleeper St. has landed several prime tenants in recent months, including United Way of Massachusetts Bay.
Interestingly, the only submarket in the Hub that was negative on absorption in the first quarter was the Back Bay at minus 38,000 square feet. Given the rampant demand seen for that 12.9 million-square-foot district, exemplified by a super-tight vacancy rate of just 7.1 percent, the decline is seen more as a statistical anomaly, with most observers spoken to predicting a rebound as the year progresses. Even with the torpid beginning to 2006, the Back Bay still boasts the highest average asking rent in the Hub at $38.93 per square foot, well above the average of $35.04 per square foot for the city overall and even better than the Financial District’s average of $36.64, all estimates by Spaulding & Slye.
North Station has an average asking rate of $26.48 per square foot, providing a price alternative for companies, as does the $25.75 per-square-foot average in Charlestown and a low of $21.85 in the tiny South Station district. Between that and the other attributes, McFarland predicted continued growth in North Station this year. And while 77 North Washington St. may be heading for full tenancy, McFarland will have space to show across the street, having just been retained by A.W. Perry Co. as leasing agent for 100 North Washington St. “I think it will do well,” McFarland said of that 6-story, 53,000-square-foot building, which is currently about 60 percent occupied.
