“We look for well-located assets with good bones that may have a distressed capital stack or need a reset in basis, a fresh perspective or some targeted capital interventions,” said Ron, one of the joint venture’s two founding principals.

Acquiring properties with both retail and office elements creates synergies and enables Hudson Assembly to curate a “street-to-suite” experience for a building’s office tenants, he said.

“A vibrant ground-floor retail mix is the ultimate building and neighborhood amenity,” Papanastasiou said. “It can drastically change the energy and perception of an asset and enhance the quality of the workday for the office tenants upstairs.”

To date, Hudson Assembly has acquired two assets — 230 Congress Street in the Financial District and 401 Washington in Downtown Crossing — that exemplify this approach. In both cases, the buildings suffered from “a broken capital stack and unfortunate timing” under previous ownership, he said.

The joint venture’s strategy of acquiring buildings at a “reset” price point enables Hudson Assembly to pass on savings to tenants in the form of concessions and meet the market on rent while also being able to make surgical capital enhancements to the properties.

In July, Hudson Assembly signed its inaugural office lease at 401 Washington with Workable, a human resources and recruiting software company. The building is a historic, boutique retail and office property the JV acquired a year earlier. In April, the building also welcomed Uniqlo’s Boston flagship store, occupying 25K SF across two floors. 

Hudson Assembly is delivering a bespoke, turnkey build-out for Workable — crafting a space specifically engineered to let the tenants scale and grow in place.

In addition to collaborating with the Workable team on the interior design of its own space, Hudson Assembly solicited its input on the building’s common area amenities.

“The relationship has had the qualities of a partnership, culturally,” Ron said. “Our interests were naturally aligned.”

Craig DiForte, Workable’s chief financial officer, said the relationship has given his company “more value in ways that go beyond square footage, whether for hosting customer or partner events or expanding our in-house video and podcast production. Hudson Assembly’s true partnership approach made our decision easy.”

The transaction is an example of how the dynamic between landlords and tenants has shifted post-pandemic, with tenants becoming more selective about who they lease space from, Papanastasiou said.

“Tenants are doing due diligence on landlords,” he said, adding that it’s a change Hudson Assembly welcomes.

Securing Workable as 401 Washington's inaugural office tenant directly validates Hudson Assembly’s strategy, Ron said. Workable originally targeted conventional Class-A properties but pivoted to this Class-B asset for its boutique feel, rich amenities and overall value.

"We tell each other that we're in the hospitality business now," Papanastasiou said. "Offering a touch of hospitality in our assets is non-negotiable, as it’s an integral piece of how the workspace has evolved. It gives our tenants a powerful tool to attract and retain talent, while driving new tenant interest and the long-term retention we want as owners."

Finding Value: 230 Congress

Hudson Assembly’s second acquisition, also completed in July, followed a similar playbook. The joint venture acquired 230 Congress Street, a historic, 12-story art deco building located on a prominent corner site in Boston’s Financial District.

As with 401 Washington, “great buildings don't always need a massive overhaul — sometimes, they just need a fresh lens,” Papanastasiou said. “With strategic capital improvements and a renewed market push, we’re very excited to reposition this property.” 

In contrast to 401 Washington, Hudson Assembly did not acquire a vacant 230 Congress. The building is already approximately 75% leased, with both the retail and office components performing well.

But in the cases of both acquisitions, the economics of the deals were “incredibly compelling,” Papanastasiou said.

To retain the building’s existing tenants and attract new ones, Hudson Assembly plans to implement a “high-impact” capital improvement plan to modernize the building’s interior common spaces, update exterior wayfinding and roll out an intentional amenity package, he said.

Improving Quarter-Over-Quarter

Headlines that paint a uniformly bleak picture of Boston’s office market can be misleading, Ron said.

Papanastasiou called Boston’s economic foundation “remarkably strong,” thanks largely to its world-class universities. In particular, the city is seeing much growth in artificial intelligence and robotics.

“Those two sectors single-handedly sparked massive office demand in places like San Francisco and New York — markets that traditionally set the trend for what follows here in Boston,” he said. 

That makes it a great market in which to invest for the long term, Papanastasiou added.

“The way that we’re capitalized helps a lot,” Ron said. “Other firms have certain return thresholds that need to be met in three to five years, but we have the flexibility to look at things from a longer-term perspective.”

Now, with a track record established at 230 Congress and 401 Washington, Hudson Assembly is focused on aggressive but disciplined growth.

“We are hunting for additional urban office and retail assets where we can double down on our investment thesis, deploy our value-add strategy and continue to establish awareness of the Hudson Assembly standard of office product,” Ron said. “We see a lot of opportunity in bringing new life to these older buildings.”

This article was produced in collaboration between Hudson Assembly 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.