DraftKings is leaving the Back Bay and placing its office bets on downtown again, as retailer Wayfair furnishes its own new home at the Boylston Street property that the gambling giant is exiting.
The office moves, which will take place in 2027, are important milestones for both homegrown companies. DraftKings will end up at 225 Franklin St., next to Post Office Square, where it will occupy around the same amount of space as the 125,000 square feet it has reported it uses at the 500 Boylston/222 Berkeley complex, where Wayfair also has offices, according to brokerages following the deal.
DraftKings’ headquarters was once downtown, in smaller digs on Summer Street, before moving to the Back Bay nearly seven years ago.
Wayfair, meanwhile, will exit its longtime headquarters at Copley Place as well as a nearby office on St. James Avenue, assembling its Boston employees in one consolidated corporate office at the 500 Boylston complex. A spokesperson for Oxford Properties, which owns the Franklin Street and Boylston Street properties, declined to comment about the DraftKings lease while calling the Wayfair lease a “great partnership we’re excited to grow now and well into the future.”
Wayfair’s move comes after several rounds of layoffs at the home furnishings seller in the past few years. The company employed 5,000-plus people in Boston in 2018, when it was awarded $31 million in state tax credits for an expansion in the city and opening a call center in Pittsfield. (State officials rescinded nearly all of those tax credits three years ago.)
Now, its Boston workforce is roughly half that size, according to information shared by the company. As recently as February, Wayfair told investors it was leasing 1.3 million square feet in Boston, a massive number that will drop significantly by the time these moves are complete. A Wayfair spokesperson said the 340,000 square feet it’s leasing for its Boylston Street headquarters will offer ample room for its roughly 2,500 Boston employees as well as flexibility for future growth.
Both tech companies are seeing significant sales increases this year. DraftKings, the smaller of the two, is growing at a faster pace as it takes advantage of the rise of legal sports betting and other forms of online gambling in an increasing number of states.
“DraftKings remains deeply committed to Boston where we have built and grown our company,” spokesperson Stephen Miraglia said in a statement. “This new space will reflect the evolution of today’s work environment featuring modern amenities, convenient access and a design that meets the dynamic needs of our employee base.”
The arrival of DraftKings could inject some energy into the Financial District, which has had a tougher time rebounding from rampant remote work during the COVID-19 pandemic than the Back Bay.
“It’s great for Post Office Square, which can obviously use a little more vibrancy,” said Tucker White, head of office market intelligence for brokerage Avison Young. “It’s definitely a plus for the downtown ... to see some heavier leasing in those Class A towers, particularly the bottom half of those towers [because] that’s what’s been plagued over the last several years.”
White said he’s noticed much more office-leasing activity downtown than in the Back Bay this year, but that’s in large part because there isn’t much empty space available in the Back Bay, particularly in the neighborhood’s nicer towers.
DraftKings’ move to 225 Franklin follows Oxford’s renovating of an amenity floor, featuring a massive redo of its event space called “The Retreat.” The 1960s-era tower was once State Street’s headquarters, and was considered the Financial District’s first modern skyscraper.
Holding onto DraftKings and Wayfair as key tenants “seems like a huge win for Oxford,” said Mark Fallon, research director at Hunneman, another brokerage.
Could big leases such as these indicate better times ahead for the city’s moribund commercial real estate industry?
“I’m not sure we’re going to see a dramatic shift in fundamentals,” Fallon said. “But we are seeing improvement in the sentiment. ... The vibe is shifting.”
Jon Chesto can be reached at jon.chesto@globe.com. Follow him @jonchesto.