While Equity did not return phone calls to discuss the matter,the rumor is sending shockwaves throughout the local leasingmarket, especially given Equity's dominant position in Boston'sFinancial District, where it owns approximately 25% of theavailable 31 million sf of Class A office space. Sources say theREIT has told anyone interested that they will have to shell outthree figures per sf to tie up the space on floors 35 and 36. Thereare caveats to the deal, one being that the estimated 40,000 sfwill not be available for 24 months. In any event, some observerssay the $100 rate could soon become the norm, as is becoming thecase on the West Coast.

"That's where the market is headed," says one broker familiarwith the Equity option. The source would not predict whether Equitywill achieve the rate, maintaining that will be a function offinding a company trying to hedge against open-ended increases."People are having sticker shock as it is," says the broker, whorequested anonymity. The $100 per sf quote "is going to really makepeople nervous, and maybe that will [prompt] somebody to bite."

Given the recent escalation in rents, such a defensive strategymight make sense, with Spaulding & Slye reporting that achievedrents hit $70 per sf by mid-year. Prior to the start of 2000, mostprognosticators anticipated rents would reach the $60 per sf levelthis year, but a 1.5% vacancy rate and demand from an estimated 5.5million sf of requirements has already sent the rate soaring wellbeyond that mark. A few doors down from One Post Office Square, forexample, the Chiofaro Co. reportedly has a 20,000-sf chunk of spacethat has found a taker at $85 per sf for the second half of a10-year lease term.