Tech Tenants Bring Fewer Suits, Higher Rents Downtown
Equity Office Properties SVP John Conley often dresses business casual but keeps a suit hanging behind his office door. His style reflects the changes downtown inspired by the influx of tech companies and their Millennial workforce. Hear more from John and other panelists at Bisnow's Future of Downtown, Aug. 18, 7:30am, Hyatt Regency.
John's company owns 1.5M SF in the Financial District: 100 Summer St, 175 Federal St and the South Station Head House. Even the once buttoned-down financial service and law firms have changed dress codes to fit in. To catch the wave, landlords are repositioning. At 100 Summer St, EOP updated the lobby with back-painted glass, colorful art, media walls and more seating to invite tenants to collaborate and have coffee.
There’s substance behind the new look. In EOP’s downtown buildings, rents that range from the high $40/SF to $60/SF, are up about 28% since January ’14, John tells us. The occupancy rate is 90%. The upswing feels more sustainable than the explosive growth of prior cycles—2000, 2007—he says. Of course, it takes a team to lease a building. John's includes Kristen Faia, Marisa Francis, himself, Colin Gillespie, Paul Filtzer, Britton Derkac, Matt George and Joanie Greenstein.
In 2004, tech tenants accounted for 1.9% of the leases signed in the city, compared to 28.5% in 2014. Of the new tech leases signed last year, 48% were in the Financial District, 25% in Downtown Crossing and 19% at the Seaport, according to a recent Cushman & Wakefield report. In part, that’s because of the larger office supply in the Financial District. But it’s also about the great public transit access for all lines of the T and commuter rail. Hubway stations are plentiful, most streets have bike lanes and many office landlords—like EOP at 100 Summer St—provide bike parking inside and outside their buildings.
Hand in hand with the tech tidal wave, thousands of new rental apartments are opening. Plus, a new generation of restaurants and clubs has hit downtown. The city population has grown by 30,000 in the past four years. Tech tenants, like Rapid 7 at 100 Summer St, are helping landlords reimagine the low-rise sections of their buildings once thought functionally obsolete. Ceilings are coming down, more amenities are going in, and as a result, John says, techies are everywhere and you can no longer tell where someone works by how they dress. Get the specifics and predictions at Bisnow's Future of Downtown, Aug. 18, 7:30am, Hyatt Regency. Sign up today!