Downtown Boston Gets a Facelift

Banker & Tradesman

4/4/08

 

The Boston office market is seeing its greatest influx of capital improvement dollars in years. While investment sales in downtown Boston have taken a pause, the impact of 2006 and early 2007’s red-hot sales environment is still being felt as new landlords kick off renovation projects in many prime office towers. Investors, after paying top dollar for Boston office assets, are aggressively pursuing opportunities to add value to their properties – and tenants are reaping the benefits.

 

Along with new entrances, improved ground-floor retail and larger public spaces come enhanced service for tenants and a higher quality of life for the city. Amid recessionary fears and a struggling economy, the prospects of improved office inventory and better infrastructure are, without doubt, bright spots.

 

Late last year, One Washington was reintroduced to the market after a $2 million capital-improvements program that included new entry doors enhancing the building’s identity and a fully renovated lobby. The project was financed by Saracen Properties and AEW Capital Management, which purchased the mid-rise in the fall of 2006.

 

During the final quarter of 2007, The Blackstone Group announced plans to invest millions of dollars redesigning the lobbies of five prominent towers, adding significant value to the central business district. Included in the project is One Post Office Square, where tenants will benefit from a new lobby, entrance and facade. In addition, the building’s exterior glass wall will be expanded and enhanced, in order to improve traffic flow and accommodate an additional 2,000 square feet of retail space in the lobby area.

 

Also under way is an extensive capital improvement program at 99 High St., a 730,000-square-foot tower located along the Rose Kennedy Greenway. The $7 million renovation project is expected to be completed in late June. It features a new entrance, granite facade on the lower levels, awnings and planters at the street level, dramatic lobby lighting, and system updates to an already high-performance asset. The renovations were being done in conjunction with Citibank opening its 11th retail branch in Greater Boston on the ground floor.

 

Rounding out the long list of Class A and B properties undergoing significant renovations are One Boston Place and Two Oliver at Liberty Square. TIAA-CREF and SITQ, partners in ownership of One Boston Place, actively have been modernizing and reinvigorating the street-level appearance of their asset. After nearly a year of planning, construction commenced on the One Boston Place plaza and facade project last summer. The first phase recently was completed, and the second phase is expected to be finished in the fourth quarter of 2008. Over the 28-month time frame for construction, the environmentally friendly design changes will include a new reflective glass facade, new plaza with environmentally benches, stonework and landscaping.

 

A few blocks away, Westport Point Capital is enhancing the tenant experience by transforming the new Two Oliver into a first-class asset with a new main lobby with contemporary finishes, dramatic lighting, and soft seating to improve traffic flow. Looking back, it’s clear that the hot investment-sales market not only changed Boston’s ownership structure, but also sparked a movement toward improving the value of Boston’s office inventory. This is great news for tenants who benefit directly from the high quality of life these projects provide.