BOSTON: Is Spec Office Coming?

No longer are companies leasing office space for the convenience of the CEO (who’s likely to be in Hong Kong or NY anyway), according to Commonwealth Ventures prez Dick Galvin. Tenants want to be where they can attract and retain skilled workers, which means a downtown address with good transportation access. (Also easy access to artisan coffee.) Over the past few years, CV has invested about $850M in offices in the Seaport and the Financial District, solid markets seeing a wave of construction.

There’s a good chance we’ll see spec office this year, says HFF executive managing director John Fowler. HFF has been talking to several capital sources looking for additional yield; they've had their fill of multifamily and now are considering spec offices. (Don't tell multifamily that... it's already fragile after the kids moved out.) With tenants like State Street, why not? The financial services giants are willing to pay higher rent for new, more efficient, sustainable space in emerging locations, Dick says. Some are doing relos from elsewhere downtown; others are migrating from the ‘burbs.

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