Office Space Gets Tighter in Some Areas as the Condo Boom Expands

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BOSTON-The Bay State’s hot condo market is expected to take between one million and two million sf of office space off the books this year, tightening up Boston’s office market in several areas of the city. Richard Lowe, a principal at Cresa Partners and head of the firm’s Boston Market Group, tells GlobeSt.com that several officebuildings in the city’s Fort Point Channel area and the Back Bay have already been converted to residential use, tightening the market for office space in both sections of the city.

“In some of these markets like the Back Bay, the market is tight because a lot of displaced tenants have to go somewhere and it is causing rents in class A space to go up,” says Lowe. He notes that the residential conversion of 360 Newbury St and 441 Stuart St. along with the sale of 73 Tremont St, and 100 Boylston St. to two area universities, have contributed to a tightening of office space in the Back Bay. “There’s more competition for space and less availability.”

The conversion of several office properties in the Fort Point Channel area, including Russia Wharf, is also having an impact on office tenants in that area, Lowe says. Many Fort Point Channel office tenants who moved into that section of the city because of its affordable rents are now looking to across the channel for office accommodations, he says. The same thing is happening in Boston’s Leather District and along the Rose Kennedy Greenway, where office buildings are quickly being converted into residential units. Although many of those buildings are in the B and C class with high-vacancy rates, the conversions leave little space available for large and mid-sized office user who don’t need or can’t afford higherpriced class A properties, he adds.

“We’re not seeing a huge percentage of the overall market(affected by residential conversions,)” says Lowe, “but in some of these smaller submarkets it will have an impact.”