450,000SF Office Pre-Lease in Place at Boston’s $500M Russia Wharf Project
- May 01, 2008
Boston Properties, developer of the 815,000-square-foot mixed-use Russia Wharf in Boston, has snagged an anchor tenant for the 552,000-square-foot office segment of the $500 million project. Asset management firm and investment advisor Wellington Management Co. will occupy 450,000 square feet under a 15-year lease agreement.”You don’t find a whole lot of deals like that in the Boston market,” Stephen Brodsky, senior vice president & managing director with real estate services firm Grubb & Ellis Co., told CPN today; the firm was not involved in the transaction. News of the lease was disclosed in Boston Properties’ first quarter 2008 earnings statement that was filed with the Securities and Exchange Commission April 30. Boston Properties came into possession of the Russia Wharf redevelopment project at 280 Congress St. about one year ago, having purchased the property through affiliate BP Russia Wharf L.L.C. from the Blackstone Group for approximately $105.5 million. The site had been part of a 25-property portfolio that Blackstone previously acquired from Equity Office Properties, which first conceived the Russia Wharf project.In addition to the premier 31-story office tower, Russia Wharf will ultimately feature a residential segment encompassing about 230,000 square feet, and about 32,500 square feet of space for retail, performance, civic and cultural uses. The project is being designed to adhere to LEED certification standards.Availability of office space in Boston’s central business district has been dwindling consistently since 2002, reaching a low 8 percent vacancy rate during the first quarter of this year, according to a report by real estate services firm Grubb & Ellis Co. Class A office space is even harder to come by, as the average vacancy rate is 6.7 percent, and the most coveted accommodations–space on the 20th floor and higher–is practically non-existent with a vacancy rate of 3.3 percent. Given the numbers, finding a 450,000-square-foot chunk of Class A space in Boston today is not so simple. “Blocks of space that big–there are none–unless you’re talking about new space that will deliver two or three years out,” Brodsky added. Financial terms of Wellington’s lease have not been disclosed; however the cost of high-end office space can be sky high, at an average asking price of $70 to $100 per square-foot for digs on the higher floors.Construction of Russia Wharf got underway last year and is scheduled to reach completion in 2011. Wellington’s lease will commence in the spring of 2011.