Many of us have read about it in the paper, others may simply recognize it as where Captain Queenan was thrown from the roof of “344 Wash” in the movie The Departed. Yet the reality is few of us actually know what Boston’s new Innovation District is and why it is of significant importance. In taking a quick step back, the Innovation District is nothing new- it has been around for years. Rather, what is new is the excitement and economic activity that has been recently infused into the neighborhood. With the help of successful marketing by the city of Boston, the “Innovation District” has quickly become a cost effective alternative to many other city neighborhoods.
To wrap our heads around this area, we must first break down its geography. The thought that the “Innovation District” is one specific geography can be slightly misleading, because trust me, there are actually 4 distinct classifications within this “District”, each of which with their own particular feel. The most basic grouping of these areas would be into Fan Pier/Seaport, the Fort Point Channel, the Convention Center Area and the Marine Industrial Park. I will go into further detail in later posts, but our focus today is the Fort Point Channel.
The drive to this particular area is not based in financial packages or tax breaks given by the city or state, because in all honesty, they don’t exist for the typical office user. I see the real appeal as three tiered, the first of which has its roots in financials. The fact is, it is cheaper to be on this side of the water. The savings vary drastically depending on product type etc, but I normally see a $5-$10/sf rent savings in the majority office space.
Secondly, is the space itself. Many companies are trending towards more open and collaborative office spaces. They want their office to reflect their company’s ideals and values. They want some sort of “cool” factor in their office. This could be exposed brick and beam, high ceilings, roof-decks, or even something as simple as operable windows. Not only can these things be attractive to current and potential employees, but to clients as well. The Fort Point Channel is ripe with these opportunities.
Lastly, and almost most importantly, is the desire to be around like-minded companies and people. We have seen this before in places like Kendall Square in Cambridge, MA, with companies seeking close proximity to MIT. Most of the people I have talked with who express interest in Fort Point are doing so based upon who else is there. With T3 clients such as DataXu, CLOVR Media, Simple Tuition, Zmags, Buzzient etc all making recent moves to and within the Fort Point Channel, it is no secret that this influx of creative and innovative companies is the best selling point the area has.
In addition to the redevelopment of many of these old buildings into office space, there is more recent growth in the retail and residential sectors. A historical negative to the area has always been its lack of eating establishments. Yet with the constant influx of new companies and the development of several new residential projects, retailers are seeing the potential in the area will be looking to capitalize. The more businesses and full-time residents in the area, the more we will see retailers catering to their demands. I remember when if you wanted lunch in Fort Point, you were most likely going to end up at Lucky’s. No longer are there just one or two places to grab a meal or coffee with colleagues or clients and this will continue to improve.
We are all excited to play a part of the continued enthusiasm and consequential growth of this particular Boston market. When I think back upon my days running financial models on the Boston Seaport Portfolio, I see the countless tangible changes to this neighborhood. Even in this past year alone, rents are rising and vacancy rates are dropping, significantly. Now is the time to take advantage of the early stage benefits of one of New England’s hot new areas.
This is the first of a number of blogs I will be writing on the Innovation District. Stay tuned!