| The architecture and design firms that were a staple client for commercial brokers leasing space in the Fort Point and Seaport areas of Boston are now looking for office space in the Financial District due to rising rents, according to Cassidy Turley FHO.
Now that rents have jumped to $40 a foot compared with $30 in many brick and beam buildings near the South Boston Waterfront and upwards of $50 a foot at Fan Pier, many of the traditional firms that were the bread and butter for commercial brokers are looking to cheaper digs across Fort Point Channel, according to a new report from the Boston-based real estate services firm.
Overall availability has dropped 6.3 percentage points in the past 12 months along the Waterfront, Cassidy Turley reports. However, while it continues to be a hot market, availability in the Seaport is limited for large users, containing just one option larger than 100,000 square feet and four larger than 50,000 square feet, according to the report. These limited options mean asking rents are rising.
Additionally, while there are more options for tenants seeking less than 50,000 square feet, many of those companies are venture capital-backed and do not want commit or invest in long-term leases at this stage. That means the new wave of VC-backed innovation companies that have been flocking to Boston may wind up in low-rise Financial District space where large institutional landlords are more willing to do a short-term deal, the report states.
"The main question is when the tech tenants start going to low-rise space in the Financial District," said Duncan Gratton, principal with Cassidy Turley FHO in Boston.
In Cambridge, rents are still elevated and continue to rise. Significant demand and a lack of available lab space in East Cambridge has caused rents to jump 7 percent in the first half of the year, and asking rents stand at $53.41 a square-foot triple net. And as large users begin turning to new construction and build-to-suits, Cassidy Turley expects rents in those buildings to average $65 to $70 a square-foot triple net.
