TAMI Tenants Flock to Boston’s Financial District
Boston’s Financial District, once the place for premium office space has in recent years transformed into a cost-relief value for the vibrant Seaport District and supply constrained East Cambridge market. As tenants are squeezed out of neighboring markets, tech companies such as DataRobot and online marketing firm Klaviyo have found affordable office space at 225 Franklin Street – the former home of State Street Bank and other traditional office users.
DataRobot, a company on the forefront of artificial intelligence, recently inked a 7-year deal occupying 57,000 square feet, with rents fetching in the mid $60s PSF, far below market averages in the Seaport and East Cambridge. Three years ago, DataRobot raised a Series B of $33M and a Series A of $21M the year prior. One would think a growing technology company with over 250 employees would need to be located in Cambridge – to help attract elite talent, however, Boston’s Financial District is now seen as a bargain for growing TAMI users.
As of Q1 2019, average Class A office rents in the Seaport are over $65.00 PSF, with a vacancy rate of 8.4% as of February 2018. Across the river, East Cambridge continues to be one of the most constrained markets in the country, with a vacancy rate of just 1.6%. Class A rents reach over $72.00 PSF on average, nearly 11% higher than in the Financial District. With just 29,700 square feet of vacant office space available in East Cambridge, TAMI users are flocking to the Financial District to acquire coveted office space.
Boston’s Financial District is home to over 30M square feet of Class A space. Average market rents for Class A space hover at $57.00 PSF with a vacancy rate of 7.0%.
225 Franklin Street is a 33-story, 943,000 square foot tower owned by Oxford Properties, a Toronto based company. The building has recently pivoted away from its traditional tenancy and has modernized common areas by adding artwork, music in the lobby, in addition to installing two golf simulators, showers, and bike storage.
Notable tenants include Columbia Management Investment Advisers, Raymond James Financial & Perkins + Will.
Source: Boston Realty Advisors Research / CoStar