In Boston's Downtown Crossing, A Timely Bet And A Full Circle Moment

At 399 Washington St. in Boston’s Downtown Crossing shopping district, fashion retailer Uniqlo cut the ribbon on a new flagship store this month, part of an 11-store national rollout.

However, the local celebration isn’t just another store opening. It’s early validation of the investment thesis of Uniqlo’s new landlords, a joint venture between two boutique commercial real estate investment firms, Assembly Investments and Hudson Group, which together acquired the 76K SF retail-and-office building just over a year ago.

“We’ve seen this building’s evolution for decades and understand its importance in the neighborhood's fabric,” said Evan Oscar Papanastasiou, founder and principal at Assembly Investments. “Because the previous ownership had already completed major system upgrades, we were in a perfect position to immediately begin our repositioning efforts, but the building still needed a fresh set of eyes and fresh capital.” 

The partnership has been able to offer competitive rents to new tenants and cast a wider net than was previously possible at this location, said Noam Ron, principal at Hudson Group.

“In many ways, Uniqlo is bringing the building back to its origins,” he said. “Though it housed a Barnes & Noble for decades, the structure was purpose-built over a century ago for the garment and textile trade. This new chapter closes the loop on a hundred-year journey from apparel retail and back again.” 

When built, the asset was a first of its kind designed with a dramatic glass façade, which was groundbreaking for the late 1800s. Now, 140 years later, Uniqlo’s seasonal collections will bring this prominent use back to Washington Street, Ron said.

Boutique, Heritage And Modern

Complementing the retail is 401 Wash, a private office identity carved out in the upper three floors of the building. With roughly 12.5K SF per floor, the space is designed for tenants seeking a building-within-a-building feel, complete with its own entrance and direct elevator access to distinguish it from the 399 Washington retail flagship.

“We are in advanced conversations for our first office lease, a full-floor tenant who would occupy the top, fifth floor,” Ron said.

The partnership is targeting a variety of prospective office tenants seeking a workplace that encourages growth, collaboration and creativity. These could include a large corporation wanting a Boston flagship or a growing startup, Papanastasiou said.

Beyond the attractive price point, the building’s physical attributes are a major selling point, he said, noting that the goal is to “embrace” the building's storied past.

“We’re leaning into the authentic brick-and-beam characteristics that give the building its soul, while implementing a modern renovation that provides a sophisticated, professional workspace,” Papanastasiou said. “It’s about honoring that heritage while meeting the high-performance needs of today’s tenants.” 

Uniqlo has also taken care to preserve the building’s historical details in its two-story space, including a signature art deco-style staircase from the 1950s and a “beautiful restoration” of original column headers, he said.

While the third and fifth floors feature exposed red brick, an homage to the building’s history, the fourth floor is a sleeker, fully built-out spec suite that’s completely move-in ready, Ron said. In addition, each floor benefits from soaring ceilings and ample natural light.

“We’ve gotten a lot of interest from groups who would prefer to be in a boutique building rather than share a high-rise lobby with a dozen elevator banks,” Ron said. “The suites are bright and lay out well for direct-access, floor-through tenant spaces.”

Premier Destination, Unrivaled Commuter Access

For prospective office tenants, as well as for Uniqlo, the building’s neighborhood character and location represent a major amenity.

Downtown Crossing provides unrivaled commuter access alongside a collection of neighborhood offerings, including dining, fitness and green space, in addition to all the adjacent retail, Papanastasiou said.

“All the MBTA stations converge here, and Boston’s Financial District is two blocks away,” he added.

The building also benefits from neighborhood investment by local businesses and organizations. Downtown Boston Alliance, the local business improvement district, has done “a fabulous job introducing public art into the neighborhood and activating the streets in myriad ways,” Ron said.

Reset In Basis Equals Passing On Value To Tenants

By resetting the asset's basis, the partnership was able to pass value directly to tenants, Papanastasiou said.

“In an era when companies are balancing the need to attract top talent with the need to be economically responsible, we can offer a caliber of office space and a level of concessions that are rarely seen in this part of downtown,” he added. “It allows us to be incredibly competitive while helping businesses bring their physical workspace goals to life.”

Papanastasiou said the partnership is focused on scaling its portfolio.

“We have the capital and the long-term outlook required to execute on complex repositionings, and we’re looking to close on several more acquisitions this year,” he said. “We see significant opportunity in the Boston market right now and plan to be incredibly active in the years ahead.”

This article was produced in collaboration between Assembly Investments and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.