During the 1980s heyday of video arcades, the town of Marshfield banned coin-operated games and threatened to fine businesses that exposed local youth to the corrupting influences of Dig Dug, Pac-Man and Donkey Kong.
Today, local officials and real estate developers are more likely to view the video gaming industry as a catalyst for downtown revitalization and retail resurgence. In Malden, Mayor Gary Christenson promotes the “gaming district” in his city’s changing downtown and its expanding array of venues, from an escape room to PC gaming parlor and soon-arriving “barcade.”
“Malden is in a virtuous cycle right now where you’ve got a great range of restaurants, some fun amenities attractive to people in their 30s and 40s, and some office and tech companies coming in,” said Chad Ellis, founder of Boda Borg Boston.
‘An Unknown Swedish Questing Studio’
Malden’s gaming cluster began to emerge in 2015. Ellis, a former Planned Parenthood executive and co-founder of a game publisher called Your Move Games, was in touch with a fellow Harvard Business School graduate about U.S. locations for Boda Borg, his Swedish, team-based questing studio chain. Ellis decided the opportunity was too good to pass up and scouted locations in several communities near Boston. The Pleasant Street location in Malden moved forward amid support from city officials, following the departure of previous tenant and downtown institution, the Sparks department store.
Boda Borg teams – comprising three or more members – to solve mental and physical challenges. The center attracts 160,000 visitors annually, and recently launched a 4,000-square-foot expansion to accommodate a total of 25 separate questing studios. About 20 percent percent of its business comes from company team-building events, Ellis said.
Developer Mai Luo doubled down on the gaming district concept this year, leasing a neighboring storefront at 96 Pleasant St. to Wanyoo Esports for its first New England location which opened in October. The complex includes 39 esports PC’s along with Xbox, PS4 consoles and private group gaming studios.
“He does get full credit for being the landlord who was most interested in taking a risk on an unknown Swedish questing studio,” Ellis said. “And the mayor’s office really made it clear they knew how to work with us and makes things happen.”
Esports Are Big Business
A block away, Quincy-based QB Entertainment opened its 8D Room Escape and Board Games in 2017. And Salem-based BitBar, which features classic arcade-style video games along with a full bar, will open a new location this spring as a ground-floor tenant in Jefferson Apartment Group’s 320-unit J Malden Center complex.
Jack Duffy, owner of the Dockside restaurant on the edge of downtown, partnered with Malden-based Action Jackson Amusements to install 20 pinball and video games last summer. On Jan. 3, the restaurant was scheduled to host a gaming tournament featuring NES, Nintendo 64 and Super Nintendo consoles.
“We were kicking around some ideas and said, `What else can we do?’” Duffy said. “Now we’re getting a different market.”
Growth of the esports industry from hobby to professional leagues is presenting opportunities in real estate, as professional team owners including Robert Kraft and retired athletes such as Shaquille O’Neal invest in esports franchises. The Kraft Group is converting a former concert venue at Patriot Place in Foxborough into an esports complex and training facility for its Boston Uprising team of the Overwatch League, which is scheduled to open this month. As esports expands as a spectator draw, the city of Arlington, Texas is redeveloping its convention center as a 2,000-seat esports arena. The 100,000-square-foot complex would become the largest facility in the U.S.
Esports also could fill underutilized real estate such as shopping malls and suburban offices, according to a 2018 report by Cushman & Wakefield.
“Malls with retail vacancies could look to esports arenas and demo spaces to fill vacancies and draw young shoppers interested in playing and viewing video games,” the report said. “Older suburban office locations near major cities could utilize esports as a repositioning strategy, as could retail locations with big box stores that are closing locations.”
A Downtown Amenity for Office Sector
The growth of Malden’s downtown “gaming district” has implications not just for retail landlords, but developers seeking to build and lease up office space in one of Greater Boston’s emerging submarkets.
Real estate executives say Malden’s recent development boom has more to do with transit than Tetris, with its MBTA station making Malden Center a logical next stop for job growth on the Orange Line beyond Assembly Row and Wellington. And Malden Center’s status as a federal Opportunity Zone offers future tax savings for developers. But the downtown’s quirky mix of world cuisine and entertainment venues provides a built-in amenity base that stands out among the inner suburbs.
“Malden is pretty neat,” said John Preotle, partner at River’s Edge master developer Preotle, Lane & Assoc. “It seems every ethnic restaurant you could think of is in Malden. If you’re trying to attract younger employees, it’s interesting and fun.”
Asking class A office rents in the “near north” submarket including Malden have increased 22 percent in the past 24 months, according to Avison Young research.
“This shows that newer buildings with access to transit and a substantial amenity base are competing with product in Boston/Cambridge,” said Tucker White, senior research analyst for Avison Young.
The rent increases reflect the Orange Line north submarket’s emergence as a destination for tech companies, with Amazon recently opening a 50,000-square-foot office at One Cabot Road in Medford, its first offices outside Boston and Cambridge. And vehicle telematics provider Agero moved into its new headquarters in September at a 115,000-square-foot build-to-suit office building at 400 River’s Edge Drive.
City Targeting Office Growth
Kevin Duffy, Malden’s business development officer, said the city’s is targeting office development following the building boom in that brought more than 1,000 apartments to the downtown in the past decade.
“The initial goal was to fill the downtown with nighttime density. Now we want to see daytime density with these office buildings,” Duffy said.
Three speculative office developments are under way between Wellington Circle in Medford and Malden Center, and at least two additional office developers are said to be eyeing site acquisitions in and around downtown Malden.
In December, Boston-based Quaker Lane Capital paid nearly $12 million for a group of properties on Dartmouth and Pleasant Streets, including a 3-story office building and parking lot. Quaker Lane’s executive team includes Carlos Fabres-Mazzei, a former broker for Eastdil Secured, and Mark Barer, a former Twining Properties development executive. Representatives were not available for comment, but the company’s web site states that it’s pursuing development opportunities near urban centers and offering advisory services on Opportunity Zone investments.
“They seem bullish on Malden,” said Stephen Nohrden, an executive vice president at Malden-based Burgess Properties who brokered the transaction. “There’s a lot of confidence from developers right now particularly because it’s in an opportunity zone, so you have the tax incentives that go with that.”