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Opinion | paul mcmorrow

Tech goes downtown

As Boston’s Innovation District fills up, developer Don Chiofaro is the winner

Boston, MA 042910 Developer Don Chiofaro (cq) in front of International Place in Boston, Thursday, April 29, 2010. (Staff Photo/Wendy Maeda) section: Business slug: 02chiofaro reporter: Casey Ross Library Tag 05092010 National/Foreign

Wendy Maeda/Globe Staff/File 2010

Developer Don Chiofaro in front of International Place in Boston.

Don Chiofaro designed his International Place office complex to attract men and women who favor expensive suits and office space to match. His lobby has soaring ceilings and massive columns, and it’s absolutely rotten with polished marble. Yet Chiofaro’s lobby will soon be full of something else: software engineers who prefer Levi’s to Zegna. The developer recently inked a major lease with PayPal, the online payment arm of eBay. The arrival of tech workers in the Financial District is a major coup for Chiofaro. And it signals some notable shifts in downtown Boston’s economy.

Don Chiofaro is writing a new blueprint for downtown towers. Most tech deals around Boston follow familiar patterns. Though blue chips like Google and Microsoft gobble up large chunks of office space in swank buildings around Kendall Square, startups and smaller firms flock to former industrial buildings in Cambridge and Fort Point in Boston. Up until now, though, if a software company on the verge of outgrowing such brick-and-beam space was looking for an upgrade, it graduated to first-class office space, either in Cambridge or in Waltham or Lexington, but not in Boston’s Financial District. In landing PayPal, Chiofaro is establishing a major technology beachhead in the domain of lawyers and bankers.

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These days, Chiofaro’s neighborhood is full of big, empty spaces. The banks that fueled the construction of Financial District office towers used to house their call centers, back-office operations, and trading floors in-house. That’s why major buildings downtown have broad lower bases and tapered towers: grunts worked on the sprawling lower floors, while execs rode the elevator. But the types of jobs that once filled towers’ low-rise floors fled the city long ago, leaving most downtown towers with huge vacant areas that white-shoe law firms don’t want.

Yet the low-rises lay out perfectly for tech firms that like to promote a collaborative atmosphere in open floor plans. PayPal landed in the low-rise of International Place for the same reason that software firms have flocked to old mills and warehouses — the space is cheap, plentiful, and easily expandable.

Aram Boghosian for The Boston Globe

Office space soon to be occupied by PayPal at 1 International Place.

The Innovation District is a victim of its own success. City Hall’s Innovation District marketing push has been wildly successful. The city drew a vague line around the South Boston waterfront and began pushing the area as a technology cluster, causing the old warehouses along the Fort Point Channel to fill up rapidly. The effort has been so successful that it enabled Chiofaro’s coup.

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Fort Point had long been a destination for young companies and other price-sensitive tenants. But the neighborhood’s sizzling office market has caused rents to explode. A good chunk of the real estate in Fort Point last changed hands at the top of the market, at prices that could only be justified by rents that are close to, if not above, pricing downtown. International Place is an odd place to go looking for a deal on rent, but the rising market in South Boston is pricing out companies that would have been natural fits for the neighborhood a year ago. That’s a sign of success — but also an indication that the Innovation District’s lure has its limits.

Boston’s center of gravity has shifted. Once it got priced out of the Innovation District, PayPal could have landed in any one of at least a half-dozen Financial District buildings. The company chose Chiofaro’s building on the Greenway, across the street from the harbor. That’s where the city’s future lies.

A common thread connects the arrival of software engineers at International Place to the gleaming new Boston Society of Architects space at Russia Wharf, the massive Vertex Pharmaceuticals construction project on Fan Pier, the skyrocketing office rents in Fort Point, and the scores of new restaurants flocking to the Greenway and Boston Harbor. None of the above could happen without the Big Dig and the harbor cleanup — public infrastructure projects have unlocked massive private investment along the waterfront.

When Chiofaro built International Place, the office complex sat at the desolate end of Boston’s business district, by a highway off-ramp. Now, the complex’s biggest selling point is the public space outside its front door. The building hasn’t moved; the city has.

Paul McMorrow is an associate editor at CommonWealth magazine. His column appears regularly in the Globe.
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