Start-up and tech companies are pioneers by nature, which even extends to things like real estate. We’ve seen this happen over the last few years with Boston’s Innovation District. And now, we’re seeing it in the Leather District, the area between Chinatown and South Station.
Just a year ago, the Leather District had plenty of available office space and few tenants. Now, it’s almost fully absorbed, largely thanks to tech companies and start-ups, with prices per square foot in the low to mid-30s, up from the high teens last spring. Companies of all sizes, but particularly those in the early rounds of venture funding, have been so happy there that the interest has spread to Downtown Crossing, from Summer Street all the way down to School Street.
The Leather District is the perfect example of the elements that are needed for a tech and start-up commercial real estate boom. Here are a few key elements:
1. It’s affordable. Growing companies need space, and a lot of it. Companies with ambition naturally want enough room to grow without necessarily having to move. Early stage organizations in particular are on the hunt for the best deal, and the Leather District is a great area meeting that need. Compared to Cambridge, where prices are in the $40-50 price per-square-foot range, the Leather District started out a year ago in the high teens to low 20’s. Any neighborhood with affordable prices is prime for rapid growth.
2. It’s flexible. One of the most important things early stage companies need is flexibility. One minute they might be dependent on angel investors and have just a few employees; the next day they could be on the cover of BusinessWeek. Business happens quickly, and they need office arrangements that can keep up. When companies first started moving to the Leather District, the landlords had the space to be more generous with lease agreements. They had the space available to expand or rearrange offices at a moment’s notice. Flexibility will always be essential for early-stage companies.
3. It looks cool. Looks matter. Today’s young companies love the brick-and-beam loft look, which the Leather District offers. Cool, hip companies like big, open office spaces with plenty of room to collaborate and stretch their legs. One interesting note, however, is that there is a clear line where looks matter significantly less than price and flexibility. Brick-and-beam is highly available in the Innovation and Leather Districts, but now at a high premium. We’ve seen companies settle for a loft look in Downtown Crossing without the brick-and-beam if it meets the rest of their needs
4. It offers an easy commute. While these are the principal attractions, there are certainly others that are key, as well. The Leather District is easily accessed by both the MBTA Orange and Red Lines, the second of which is especially important when it comes to getting talent from Cambridge. South Station offers commuter rail and Amtrak service for the Northeast corridor and the Silver Line extends into Boston’s neighborhoods.
5. It has amenities. There are also plenty of gyms (and yoga studios), restaurants (from Dim Sum to French) and bars to help foster the kind of live/work/play balance that so many companies seek to achieve.
6. There is good connectivity. Additionally, there’s a long fiber corridor running down Summer Street, meaning that the area has the technological capabilities that early stage companies need. Together, these elements indicate that the market in the Leather District – and now Downtown Crossing – isn’t slowing down anytime soon.