In what could be one of the largest office leases ever penned in Boston, State Street Corp. is negotiating with the developers of One Lincoln St. to take more than 500,000 square feet of space at the proposed 36-story tower, industry sources said last week. Some sources claim the commitment could ultimately exceed 700,000 square feet.
In the meantime, State Street is also homing in on a separate deal to lease upwards of 200,000 square feet at One Federal St., while another major block of available space at 100 Summer St. is supposedly being grabbed by Fidelity Investments.
Calls to One Lincoln St. officials were not returned by press deadline, but a spokeswoman for State Street did acknowledge that the two sides are in active discussions. The effort covers a range of leasing requirements, said Alyson Riley, including State Street Global Advisors, which recently broke off talks to move into a 475,000-square-foot building in South Boston.
“Yes, we are looking at that,” Riley said of One Lincoln St., a 1980s-era project stalled for more than a decade by various factors. Riley could not provide an estimate of how big the pact would be, but said it would involve multiple divisions of State Street, a diverse financial services company which bills itself as the seventh leading money manager in the world. The firm currently employs more than 17,000 people, 12,000 of whom are located in Greater Boston.
While unable to give a precise estimate of when an agreement might be reached, Riley did say that “we may have something [to announce] in the near future.” With the site currently being cleared to begin construction of an underground parking garage for 900 vehicles, One Lincoln St. is aiming for an opening in early 2003. Sources insist that the two sides are well on their way to finalizing a commitment.
“Everything I’m hearing is that it is progressing rapidly,” said one Boston broker. “With a deal that large, there is always the potential for something to go left or right, but we understand that they are right on track at this point … It looks very encouraging that they’ll get something done.”
Designed by Jung Brannen Assoc., One Lincoln St. was initially delayed by the real estate crash of the early 1990s. It then suffered another setback last year when developer Donald Chiofaro was named to help Columbia Plaza Assoc. – an original member of the development team – get the structure off the drawing board. Chiofaro was ultimately removed from the $360 million project when he failed to meet certain deadlines, with New Jersey-based Gale & Wentworth finally stepping in to get the tower moving ahead.
Gale & Wentworth Senior Vice President John B. Hynes III, unavailable for comment last week, previously told B&T that “everyone is looking at” One Lincoln St., with other sources maintaining that both the Choate Hall & Stewart law firm and PricewaterhouseCoopers are leading candidates to lease space in the 1.04 million-square-foot tower.
On the other leasing front, Riley said One Federal St. is also on State Street’s radar screen, with the firm supposedly focused on a large block of space left open by the merger of BankBoston and Fleet Bank. Although Riley said the firm is “looking” at the property, another downtown broker insisted that “they have committed” to the space, which is located on the 38-story tower’s lower levels. In addition, Donaldson, Lufkin & Jenrette has snagged more than 70,000 square feet left over by Fleet, reportedly taking the ninth, 36th and 37th floors. Calls to Clarion Realty Services, leasing agents for One Federal St., were not returned by deadline, while efforts to contact DLJ officials were unsuccessful.
Rare Opportunnities
A few blocks away, the door appears to be slamming shut on another sizeable space opportunity. Sources said last week that Fidelity Investments will take floors three through 13 at 100 Summer St., a 32-story tower owned by Equity Office Properties. That space, as well as additional floors on the upper levels, is being opened up by the departure of Blue Cross and Blue Shield of Massachusetts to Landmark Center in the Fenway. About 400,000 square feet of space was left open by the BCBS defection. Two of the floors, accounting for about 70,000 square feet, have supposedly been committed by World Street Corp. The Fidelity commitment is said to range between 200,000 and 300,000 square feet.
Both One Federal St. and 100 Summer St. were seen as rare opportunities for Boston tenants needing large blocks of contiguous space. The disappearance of those two buildings from the market will exacerbate one of the nation’s tightest office markets, with Meredith & Grew placing the Hub’s current vacancy rate at just 2.1 percent. Other alternatives are also drying up, including 111 Huntington Ave. in the Back Bay, which is said to be almost 70 percent committed. Along with Palmer & Dodge and Bain Capital, Towers Perrin has reportedly agreed to lease 80,000 square feet in the 36-story, 930,000-square-foot tower.
Tenants do have one new option to ponder, however, with the developers of 131 Dartmouth St. in the Back Bay breaking ground last week on a 365,000-square-foot office building. CB/Richard Ellis/Whittier Partners is exclusive leasing agent for the 11-story building, which is being developed in a joint venture between Sullivan Properties, Edward A. Fish Assoc., Heritage Property Investment and Weston Assoc.
