What's the Deal with Large Office Transactions?
Here in Boston, many employees are still working from home. Despite this, there are still several large office transactions taking place. From international mega-companies like Amazon to highly-successful organizations started right here in Boston, companies recognize the value of having an established office space. But what’s the point of having a significant footprint when all your employees are working remotely? Well, it turns out there’s some very good reasons for doing so.
Everyone knows the pandemic made the number of employees working from home skyrocket. Despite the low numbers of employees in the office, Boston has experienced some sizable office transactions in the past year. Back in January, Amazon locked down an additional 33-acre block in Seaport Square, taking over 630,000 square feet spread over 17 stories of one office building. This is in addition to the 430,000 square feet they signed for in Seaport Square just three years ago. Wellington Management signed a 10-year expansion, and took an additional 66,000 square feet in Boston’s Financial District. That brings their space to a total of 524,000 square feet. Hubspot renewed and expanded to take down the entirety of 2 Canal Park in Cambridge, increasing their space by 30,000 square feet to a total of 205,000. In May, fitness tracker WHOOP committed to One Kenmore Square, where they plan to open their new headquarters in a 121,000-square-foot space. Finally, Pegasystems signed a lease for 130,000 square feet at 225 Wyman Street in Waltham after offloading their Kendall Square office. These significant numbers demonstrate the wave of construction that's going on during the pandemic.
Lab Space Continues to Take Over
While it may seem a bit unusual that large office transactions are taking place, there is significant reasoning behind the moves. The ability to control space is one particularly strong factor. In a rapidly-developing market such as Boston, large companies see the tremendous value in landing significant properties when they become available. Also, it serves as a defensive leasing approach for larger office users. Amid rapid office-to-lab conversions, office inventory will continue to shrink as landlords capitalize on the unrelenting demand for life science space. As a result, there will be less large blocks of office to choose from in the near future. With so few pure office developments in the pipeline, companies see how important it is to snap up office inventory while it’s available.
Appetite for Construction
Employers recognize that they will attract high-quality team members with high-value workspaces. Since flexibility is now the norm, they need strong properties to bring in high-caliber employees. After all, who would want to leave their home office to work somewhere undesirable? This may play a role in why three of the five companies we mentioned above will be moving into new construction. Employees need good incentives if employers want them to make their way into the office every day.
On Solid Ground
Holding an office presence is a demonstration of strength. Having an established headquarters is a declaration that a company is functioning at the best of their ability, even when the majority of employees are working remotely. It makes it clear that an organization isn’t going anywhere. But it also serves a commitment on a local level. It shows an investment in the community, as well as to the office space as a whole. While there’s no defined end date for the pandemic, betting on the office shows that a company believes an office will serve an important role in the future. It shows a real understanding of the collaboration and togetherness that many companies rely on.
We all know that the office won’t be exactly the same as it used to be. But the office space will certainly continue to exist, albeit in a new, adaptable form. If you’re interested in exploring your organization’s return to the office space, the team of seasoned professionals at Cresa is ready to help you consider your options.