Anatomy of 2010’s Best Deal
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|CBA awarded McCall & Almy top honors recently for MFS? 300k SF lease at 111 Huntington, so we asked broker Dave Richardson(whom we snapped with Bill McCall) how that lease came about. Dave says that in Q1 '09, his team and MFS senior managementpiled into a van to tour buildings around the city like One Federal, International Place, 75 State St, and the Hancock Tower. Although they could have economized elsewhere, they chose the tower in the Pru complex, a location they had long eyed. For them the Back Bay is home—they're now at 500 Boylston St. At the Pru, MFS employees have T access, ample parking, and for lunchtime, it's shop, shop, shop. By Q1 '10, they made a decision and later in the year signed the lease.|
|Dave?s colleague Garrett Larivee says some tenants are comfortable expanding in the city now. Rents are still soft, but companies are optimistic enough about the economy to commit to growth space over the long term. Having Boston Properties' Atlantic Wharf come on line—and lease well—will give the Financial District a boost. But Dave says he's concerned about other parts of the Financial District where a lot of retail space has been stubbornly vacant and low-rise offices are 20% to 25% vacant since the ?08 financial crisis and development halted on One Franklin. If the economy picks up, more tenants may be drawn by Financial District rents way below replacement cost. In a year in the Back Bay, the office vacancy fell to 8% and rents are pushing $60/SF, up from the low- to mid-$50s.|
|McCall & Almy?s man in the suburbs, Len Owens, says there's been a slowdown in the activity of late '10 and early ?11. Then, Dassault took 330k SF in Waltham and Avid Technology moved from Tewksbury to Burlington. Now on Rt. 128, he says some major corporations are signing early lease renewals. Landlords want to lock in creditworthy tenants and those same businesses want to lock in rents that have fallen 25% since ?05. They tend to take the same amount of space or contract. But on Rt. 495, Len says it's real slow, with some buildings vacant for years. The big question: Who will create the jobs to fill the space?|