Makella Houdagba
Jeffrey Myers
“Flight to quality” remains the foremost trend in new construction as Boston’s office sector slowly makes its way through this post-COVID cycle. Buildings such as 10 World Trade and South Station Tower have been delivered to round out this cycle of new construction, trophy-class buildings. This creates pressure on aging Class A buildings and their tenant offerings.
In a world where companies are trying to bring employees back to the office, amenities have become a primary factor in decision-making. As Colliers’ Senior Vice President Lauren Vecchione notes, “Amenities are currently a top priority for clients when evaluating their options. Specifically, they are prioritizing access to outdoor space, wellness centers, and large assembly/all-hands meeting spaces.”
Vacancies are lower in Boston’s trophy-class buildings than in the other Class A segments. Tenants have been flowing into these buildings due to their ability to provide best-in-class amenities and spaces. Top-end buildings have recorded more than 320,000 square feet in positive absorption, year-to-date, as of 25Q3 — a distinct contrast to the negative absorption in both standard A and lower A. Tenants who chose to lease space in newer or to-be-renovated buildings this year include the toy company, Hasbro, which will move to 400 Summer, a two-year-old building in the Seaport, and KKR, which relocated to Two International Place, a building undergoing a $100 million reinvestment project.
The most recent addition to the Boston skyline, South Station Tower, has a two-floor health and wellness center, an 11th-floor private park, and a dedicated event space. The ninth floor features an extended living room, a market, and a full-service restaurant for tenants. Concurrently, 10 World Trade delivered with a 150-seat auditorium, a 15,000 square foot sky-level fitness center, and two acres of landscaped outdoor space. When Winthrop Center opened its doors in 2023, tenants were offered gourmet culinary options, a game room, an exclusive bar, and a doggy daycare. To keep pace with the new products coming online, owners of older generations of Class A buildings have decided to upgrade; a good example is One Lincoln, which completed renovations that added high-class amenities.
The amenity war among CBD office spaces has ultimately benefited landlords of premier properties, fueling a widening rent spread between Lower A and trophy-class buildings over the past five years.
Marianne Skorupski
Anjee Solanki
Sheena Gohil