Boston’s Tech Companies Are Heading Downtown
Boston’s tech scene is growing out of its typical loft office enclaves into downtown skyscrapers, and CRE is rushing to keep up.
“I quite honestly looked at downtown Boston 15 to 20 years ago as untouchable for tech companies,” former Acquia CEO Thomas Erickson said. “It is now very touchable and real.”
Boston’s tech scene is maturing. Acquia, a content management software company, is one of many tech companies in the New England city on the rise. Since its founding in 2007, it has grown to have over 750 employees and more than $150M in revenue. The company has its office at 53 State St., a building formerly home to law firm Goodwin (formerly Goodwin Procter) before it moved to the Seaport.
While tech is one typically associated with loft-style Class-B offices at the start, it is growing up. That is a boon to downtown landlords.
“I think it’s pretty obvious in Boston what we once knew as the Financial District is no longer,” Erickson said. “Technology is the primary benefactor of that. Technology agencies are moving in while financial and legal folks are moving into Seaport.”
The Financial District and Downtown Crossing have historically been neighborhoods packed with financial, legal and consulting tenants, but that facade is rapidly changing. Boston Consulting Group, Goodwin and PwC have all left or are in the process of ditching downtown for the Seaport. While the exodus would normally create a headache for landlords, the vacuum is producing opportunity for growing tech companies feeling the space constraints of the typical tech scene of Fort Point and Kendall Square.
“For real estate, it creates a boom as tech is forced out of Kendall Square,” Erickson said.
Available office space in the East Cambridge submarket is either hard to come by or increasingly expensive. The lab-dominant market is home to growing life science companies pushing tech companies out, as many office buildings are converting to labs. Fort Point loft offices are also becoming more attractive to bigger firms like General Electric and Amazon, so growing companies are turning to downtown.
Software companies CloudHealth Technologies and Bullhorn have offices at 100 Summer St., a downtown skyscraper also home to law firm Nixon Peabody. Software company Rapid7 also has its headquarters there, after moving to the building from Back Bay in 2013, and will move again to 147K SF at The Hub on Causeway by North Station in 2019.
The Boston Planning & Development Agency announced a partnership with WiredScore in 2017 to include broadband readiness in its Article 80 design review process, signaling the importance of tech in CRE. The company began in 2013 with a New York partnership to show reliable connectivity infrastructure in the city’s buildings. It has since expanded to numerous markets, including Boston.
“Our engineering team works closely with our clients to make recommendations on how they can improve connectivity within their buildings,” Barendrecht said. “Wired Certification isn't just an evaluation, our aim is to raise the standard across the board so that all tenants have a positive digital experience in their office.”
Tech is dominating Boston’s positive real estate cycle, and office landlords are noticing. Companies are looking for near-instant availability with space already built out. WiredScore helps identify what spaces are plug-and-play, a boon in a cycle where even more traditional companies like GE see themselves as tech companies.
“Companies across all industries are increasingly reliant on technology and the connectivity that powers it,” Barendrecht said. “Anyone who works in an office knows what happens when the internet goes down: work grinds to a halt.”
Hear more on Boston’s tech scene from Erickson, Barendrecht and other panelists at Bisnow’s Gettin’ Techy With It event Jan. 18 at the Courtyard Marriott Boston Downtown.