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Soaring rents squeezing Boston-based industrial firms

Zak Rossetto (left) and Josh Raymond worked on a sign at Design Communications.David L. Ryan/Globe Staff/Globe Staff

When the sign maker Design Communications Ltd. moved into an old Army depot on the South Boston Waterfront 31 years ago, the place was a no-man’s land, a distant industrial zone of giant cranes, drafty warehouses, and cheap rents.

Today, that old depot is hot property, rebranded as the Innovation and Design Building and buzzing with startups. A new owner is pouring money into a rehab, but has also nearly doubled the rent on Design Communication’s 40,000 square feet, prompting the company, which employs more than 100 people, to look elsewhere for new digs.

“Our home has become very trendy,” said Mike McCarthy, the company’s vice president of operations. “I understand why, and it isn’t a shock. We just hope there’s someplace we can go — and stay in Boston.”


Yet as real estate prices surge and development pushes into places that were long neglected, the pressures are rising on industrial space all over the city. Boston has just 3.6 square miles of land zoned for industrial use, less seemingly every week. Two prominent properties in the South End, for example, Quinzani’s Bakery on Harrison Avenue and the Flower Exchange on Albany Street, are being sold to developers.

The Boston Redevelopment Authority is studying industrial stretches of Washington Street in Jamaica Plain and Dorchester Avenue in South Boston with an eye toward rezoning them for transit-oriented housing. And Widett Circle, barely noticed before it was tapped for a potential Olympic Stadium, sits squarely in the Walsh administration’s sights for a big redevelopment.

All that threatens to further squeeze industries that were already under pressure from changes in the global economy. Manufacturing employment in the city has fallen by half since 2003, according to BRA figures. Jobs in trucking and warehousing shrank by one-quarter in the 2000s, though they’ve rebounded since the end of the recession.


“Not everybody works for Fidelity or Vertex,” said Michael Vaughan, a development consultant who is helping the food wholesalers in Widett Circle negotiate a potential move. “This is how people earn a good living and stay in the city of Boston. The challenge is how do you make sure there’s room for them in a very land-poor city.”

City officials say they’re trying to do just that.

The BRA is completing an updated master plan for the 191-acre Boston Marine Industrial Park at the edge of the Seaport, which may result in more industrial uses on one of Boston’s biggest swaths of developable land. And Walsh’s citywide master plan, Imagine Boston 2030, should help identify other areas that could house industrial companies, said John Barros, the city’s chief of economic development.

“We want to make sure we have our share of those jobs for our residents,” Barros said. “We think there are some areas in Boston that can be further planned for and supported.”

One is the Newmarket District, a thriving cluster of food distributors, construction suppliers, and light industry straddling Massachusetts Avenue near Interstate 93. Today about 235 companies employ more than 20,000 people there, said Sue Sullivan, executive director of the Newmarket Business Association.

Mike McCarthy is Design Communications’ vice president of operations. “We want to stay in Boston and keep working with the team we have now,” he said.David L. Ryan/Globe Staff

Newmarket, which sits on the edges of the booming South End and South Boston, worked closely with the Menino administration to preserve its industrial zoning, said Sullivan. Now the association is working on a proposal to get state and local incentives to build affordable new industrial space on underused land, in exchange for requirements that the tenants hire local residents. It hopes to finalize a proposal in the next few months.


“We want to make this area viable for the next 50 years,” Sullivan said. “A lot of the companies we have here need to grow, but the space they need to do so is price-prohibitive.”

Then there are the companies for which the whole city feels price prohibitive.

For Design Communications, a location in the core of Boston is key to recruiting employees, McCarthy said. The company, which makes large signs for hospitals, universities, skyscrapers, even TD Garden, hires many of its workers from local art and design schools. They live in Boston and bike or bus to work in the Seaport District. Most, McCarthy said, are unlikely to follow him an hour out of town.

“We could move to Worcester or Providence, but that’s not what we want to do,” he said. “We want to stay in Boston and keep working with the team we have now.”

Design Communications has been talking with city officials about other locations, but the company needs a lot of space — 40,000 square feet — and McCarthy hasn’t found any at rents it can afford. Its lease is up in 2018, leaving Design Communications little time to find a new home.

Its current landlord, Atlanta-based Jamestown Properties, reportedly spent about $120 million to buy the Boston Design Center and neighboring Bronstein Center in 2013 and is investing in a major overhaul, even replacing every window in the 1.4-million-square-foot complex. Jamestown offered Design Communications a discounted rent, said president Michael Phillips, but the upgrades mean prices will inevitably rise from the rock-bottom rates of old.


“Even the manufacturing tenants want elevators that work and steam pipes that don’t freeze,” Phillips said. “But nobody wants to pay more to have it.”

Neither Design Communications nor Jamestown would disclose rent figures.

While the new Innovation and Design Building has attracted architecture firms and tech startups, Jamestown aims to remodel it largely as a hub of industry — 21st Century style. Tenants include high-end furniture makers — whose spaces look and sound little different than Design Communications’s — and MassChallenge, a startup accelerator that includes many small manufacturers, supported in part by a 5,000-square-foot workshop to develop prototypes, complete with 3-D printers.

“We’re very focused on continuing to provide opportunities for people to manufacture things there,” Phillips said. “It’s the core of our business plan.”

Still, Phillips acknowledged, it’s easier for Jamestown to accommodate a startup manufacturer that doesn’t need much space than a mature company that needs 40,000 square feet to make giant signs. In a high-cost city like Boston, he said, companies that need lots of cheap space will naturally gravitate to the fringes of town.

Vaughan said Boston faces a difficult challenge in balancing new development and preserving middle- and working-class jobs.

“The success of running a city is making that good soup,” Vaughan said. “We need a little bit of everything.”


The waterfront building’s new owner has nearly doubled Design Communications Ltd.’s rent. David L. Ryan/Globe Staff

Tim Logan can be reached at tim.logan@globe.com. Follow him on Twitter @bytimlogan.