Ben Sutton & Jeff Becker
With General Electric’s announcement that it will move its headquarters – and about 800 jobs – to Boston, many see the move as validation for the region’s reputation as a “magnet for innovation,” and a testament to the incredible transformation that has unfolded in the last decade and a half. Regarding the move, CEO Jeff Immelt noted, “We want to be at the center of an ecosystem that shares our aspirations.” Boston’s Innovation District will certainly be a fit for a company looking to attract a technologically fluent, collaborative, dynamic and creative workforce as GE remakes itself into “an industrial company for the digital age.”
In the wake of GE’s announcement, we may see other companies follow suit and begin searching for space in the Seaport District (including those that work closely with GE already). But the area hasn’t always been a hotspot for innovation and technology companies. Historically, Boston has actually been cost-prohibitive for companies looking to move. According to Moody’s Analytics, the cost of doing business in the city has traditionally been higher than the national average – it is currently 23% higher – and the business costs of cities like Dallas or Charlotte are much lower. As the Seaport has transformed over the course of the last 15 years (and seen an influx of large firms move across the Fort Point Channel), companies are now willing to pay more money to be here – where investing in innovation makes financial sense, and the access to talent and amenities outweighs the price differential.
Still, could anyone have imagined that GE would move to the Seaport District 30 years ago? The Seaport District is wildly different today than it was then. Two experts at NAI Hunneman, Ben Sutton and Jeff Becker, weigh in based on their experiences in the neighborhood.
Value of space:
According to Jeff Becker, the price for brick and beam office space in the Seaport District in 1985 was $10-12 per square foot, and for industrial space, it was around $2-4 per square foot. The neighborhood provided great value, but it wasn’t necessarily attractive to companies like GE back then. Today, Ben Sutton says “We see rates in the high $40s, around $47 or $48 per square foot” (a comparable rate to low-rise space in financial district towers but the real value is the proximity to like-minded companies). The Seaport also provides a strategic location with access to downtown.
Industries represented in the Seaport:
The Seaport has traditionally been thought of as an industrial area. “As the heart of Boston’s industrial past, it was home to fisheries and waterway transportation dating back to 1865 when Boston Wharf put up its first building,” says Jeff. As a multidisciplinary and industrial hub, it supported the infrastructure of the downtown and metro area and it wasn’t known for one sector. Mayor Menino’s vision for the “Innovation District” ultimately reshaped what companies thought of the Seaport. Rebranding and investing in key players has been a big part of this effort – think big players like Vertex, Goodwin Procter, PricewaterhouseCoopers, Fish & Richardson and Fidelity Investments alongside emerging technology firms that are pushing the boundaries of innovation and reshaping the workplace, like WeWork and LogMeIn. “The Seaport District is known for its tech companies and startups, which can lease space that works for them as they grow,” adds Ben. Growing software companies like Workable, Skyhook and Autodesk call the Seaport District home, and will soon call GE a neighbor. Landlords like Clarion Partners, Invesco and Jamestown have also been instrumental in helping turn the Seaport District into a place where these companies can thrive.
Identity and culture:
The Seaport District has embraced a new and distinct identity, moving beyond the notion that the neighborhood is only an industrial area that supports Boston. But the area is not just a hot neighborhood for emerging companies. As a haven for creative tech types, it’s also a destination where we’ve seen increased residential development, hotels, new hip restaurants and a significant retail presence. As Ben says, “The Seaport is a place where we see younger companies looking to cultivate the type of work environment they want, with a particular lifestyle.” Class B, brick and beam office space that features an open floor plan is attractive to tenants, and this in turn drives interest in more projects – those that meet the “work, live, play” attitude of employees, like new eateries and mixed-use projects with a residential component that employees can call home. Developers are eager to meet these needs: the last big parcel of open land at Seaport Square was recently sold with plans for development. GE has taken note, and with this move has reaffirmed what Bostonians have been witness to: established firms and up-and-coming startups alike now look to the Seaport as the newest arm of Boston.
GE is one of the latest companies to move to the bustling Seaport District, but it certainly won’t be the last. And with the company’s decision to move comes a larger discussion for GE: how will they reshape their culture and identity in a new location? The move also gives even more credence to the buzz behind this corner of Boston’s hot real estate market, where the vacancy rate is at a historic low. All of this has implications for Boston beyond the Seaport. Boston is the innovative ecosystem CEO Jeff Immelt was looking for.
NAI Hunneman’s Downtown Team
NAI Hunneman’s Downtown Leasing & Advisory Service team consists of Peter Evans, Ben Sutton, Jeff Becker, Brooke Blue and Colin Gordon.