Although it will be occupying one fewer floor, Forrester Research has decided to remain at 400 Technology Square in Cambridge.
As the local office market moves into the second quarter, some things are changing and others will remain the same, with Forrester Research opting to renew for five years at Technology Square in Cambridge while two well-known tenants appear on the march from their longtime homes in downtown Boston. UBS Financial Services is forsaking its namesake tower at 265 Franklin St. for nearby One Post Office Square, according to sources, whereas architectural firm Shepley Bulfinch Richardson & Abbott is reportedly leaving 40 Broad St. for the Hub’s burgeoning Seaport District.
In another major transaction unfolding in Boston, Investors Bank and Trust Co. has agreed to remain at 200 Clarendon St. in the city’s Back Bay district, sources have told Banker & Tradesman. By some estimates, the 10-year renewal at the landmark John Hancock Tower will be in the 350,000-square-foot range, making it among the top leases in the city this decade. IBT has been in the building since 1996, initially occupying 160,000 square feet. “That is the case,” one source maintained last week of the renewal decision, although Beacon Capital officials and representatives of IBT did not return phone calls by press deadline.
The second largest tenant at Technology Square, Forrester Research will slim down by a floor to about 125,000 square feet at 400 Technology Square. The 203,000-square-foot property is one of seven buildings in the Kendall Square office/research quadrangle, which is owned by the Massachusetts Institute of Technology. According to an industry source, the so-called “blend-and-extend” arrangement provided stability in the complex in exchange for a reduced rental rate struck by Forrester. By one estimate, the price per-square-foot on Forrester’s rent has dropped from the mid-$40 range to about $30 per square foot. Given the current climate, it was apparently a concession the landlord was willing to make, especially after Forrester aggressively scoured the area mulling other options.
“It’s a significant transaction for MIT and everyone involved,” said one source, who noted that the deal is among the largest office leases struck in Cambridge during the past two years. The city has been hit hard by the regional economic slump, bringing office vacancy rates up to 15.9 percent at the end of the first quarter, according to Lincoln Property Co. research director Emily Schwartz.
Richards Barry Joyce & Partners is representing Forrester in the lease renewal, with Lynch Murphy Walsh Advisors acting on behalf of Technology Square. RBJ officials declined comment when contacted last week, while efforts to reach Lynch Murphy brokers by press deadline were unsuccessful. Despite that, sources insisted that Forrester has committed to 400 Technology Square, maintaining that the final agreement is on the verge of being signed. “It’s definitely going to happen,” opined one source tracking the discussions, claiming Forrester is “staying put.”
‘Very, Very Close’
The SBR&A deal is also nearly completed, concurred a source familiar with that situation. SBR&A has agreed to lease the 11th and 12th floors at the World Trade Center East office building, allowing the firm to expand from about 45,000 to 66,000 square feet. “It’s very, very close,” said the source, predicting the lease will be inked by all sides in the coming week. Calls to SBR&A officials were not returned by press deadline. Landlord broker William Collins of Spaulding & Slye Colliers and tenant agent David Martel of Cushman & Wakefield both declined comment on the negotiations.
If SBR&A does indeed depart, it would end an extensive relationship between the firm and 40 Broad St., an 11-story Greek Revival building located near Faneuil Hall. The 82-year-old property was renovated in the 1980s using a design conceived by SBR&A, which subsequently became the building’s largest tenant. Forty Broad St. was purchased by TMW Real Estate Advisors in 2000 for $64 million. The 293,000-square-foot building is now owned by an affiliate of Prudential Real Estate Investors, which bought TMW’s real estate holdings in 2002.
Another intriguing element of SBR&A’s move into the Seaport District is the amassing of several well-known architectural concerns in the area. In a deal reported earlier this year by Banker & Tradesman, for example, Elkus/Manfredi Architects has agreed to relocate to 300 A St. in the Seaport area, joining longtime stalwarts Jung/Brannen Assoc. and Brian Healy Architects.
Boston Properties, the owner of 265 Franklin St., also will apparently be losing its lead tenant given the pending relocation of UBS to One Post Office Square. According to sources, the financial services company will lease about 65,000 square feet in the new location, or about the same amount it occupies at 265 Franklin St. Officials at Equity Office Properties, owners of One Post Office Square, declined comment on the report, while a Boston Properties spokeswoman said her firm “cannot confirm or deny” that UBS is leaving 265 Franklin St., which is known as “the UBS Building.”
If UBS does defect, the property’s moniker would be changed, said the Boston Properties spokeswoman, Laura Marchisi. “If they leave, the sign will come down,” she said.
Although the pending leases represent sideways absorption and even downsizing in the case of Forrester, the activity is considered encouraging by many observers, who note that the office market has been stagnant for the past several years. Schwartz reported flat absorption in downtown Boston during the first quarter, but said a stream of leases by small- to mid-sized companies yielded a measure of hope. During the past three months, she calculated, nearly 200 leases averaging about 8,000 square feet have been signed in the market, although Schwartz added that major downsizings have stunted some of that momentum.
According to Lincoln, Boston’s Financial District experienced negative results in the first quarter, bringing the citywide net absorption to minus 40,000 square feet despite a solid showing in the Back Bay. The availability rate in downtown, which reflects both direct and sublease space on the market, increased from 16.3 percent to 16.6 percent in the quarter, Lincoln reported. The average rental rate dipped slightly to $30.92 per square foot, with Class A space estimated at $38.25 per square foot average and Class B properties at $20 per square foot.
