News
YOUR GUIDE TO THE . . . Seaport District
December 15, 2010
| With two big office lease renewals totaling 328k SF and a $194M multifamily sale in the Seaport District in recent days, we thought we?d take a snoop around Boston's last CRE frontier, once dominated by fishing rigs, factories, and parking lots. |
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| What first piqued our interest was that on Thursday, Pembroke—a subsidiary of Fidelity Investments—announced the Foley Hoag and Nutter McClennen & Fish lease renewals through 2021 and 2022, respectively. (We snapped Pembroke Real Estate's Seaport Place, the two office towers with hotel between, and its World Trade Center across the street on the water.) The 328k SF in two leases is a sign the Seaport District?s beginningto emerge as an alternative to the Financial District and Back Bay, Property & Portfolio Research economist Mark Hickey tells us. But the District still has a long way to go, he says. It needs more development and a stronger connection to downtown. |
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| But with 10M SF of offices and new hotels, restaurants, museums, retail, and transportation, things are changing and Pembroke SVP Edward Johnson IV (above) has had a front row seat. In ?85, Fidelity Investments and The Drew Co redeveloped the World Trade Center. Back in the '90s when Seaport Place was still being planned (its first building, the Seaport Hotel, opened in ?97), Pembroke faced the challenge of convincing others to believe in its long-term vision of growth. Restaurants that need to think short term (like how many people will walk by my door today) took time to buy in. Now, Edward tells us Seaport East, completed in 2000, is fully leased and West, completed in ?02, is 87% leased. Most original anchor tenants have renewed (?knock wood?), with average rents in the mid-$40s/SF. |
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| A turning point for the Seaport District was completion of the Big Dig with its amazing infrastructure network, including the MBTA's Silver Line with a stop (above) across the street from Seaport Place. Also, it brought the Pike extension, the tunnel to the airport, the bridge to I-93, new surface roads and underground utilities including fiber optic cable. The demolition of the elevated Central Artery eliminated an ugly barrier between the Financial District, the Harbor, and the Seaport. The new Convention Center nearby is going gangbusters, says Mark, and there's talk of expanding it. |
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| The district has great potential since every windswept parking lot is spoken for by a developer or investor, Mark tells us. On this stretch (above) between Pembroke?s property and the Financial District high-rises, the City approved plans earlier this year for the 20-block $3.5B, 6.5M SF Seaport Square mixed-use complex. But the Seaport District faces stiff competition from the traditional downtown, says McCall & Almy president Bill McCall. There needs to be more leasing, job growth, and rents at $70/SF before much more office development occurs there. According to PPR, the vacancy rate is 7.8% in the Back Bay, 11.5% in the Financial District, and 15.9% in the Seaport. The average asking rent in the Financial District is nearly $36/SF versus $23/SF in the Seaport District. |
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| Mega projects may not be making a splash right now, but smaller ones are happening like Legal Seafoods? new waterfront restaurant complex (above left), to open in February. Across the street, the 465-unit Park Lane Seaport apartment building with ground-floor retail sold last week for $193.8M. RBJ?s Michael Joyce(who repped Nutter in its lease renewal a block away at Seaport Place) says projects and deals like these show the District is moving forward. |
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| We snapped the Boston fish pier, one of several locations where marine activities are still going swimmingly. In the late '90s, Bill says plans for the Seaport District were also flying high. Back then, there were 3.3 million people working in Mass., now there are 3.1 million, he says. The Seaport will be the growth area of Boston, Bill reiterates; there's no other place to build substantial new projects. But the economy needs to get moving again—the question is, when? (Do you like our cliffhanger? We just sawHarry Potter.) |
