Boston’s tallest office tower in 25 years officially broke ground Thursday, the latest manifestation of a downtown job market that just keeps roaring along.
One Congress, a 600-foot-tall skyscraper atop the Government Center Garage, is scheduled to open in 2022 as the new headquarters for State Street Corp., which has leased about half of the building’s 1 million square feet. The other half is still available for lease and will provide room for companies to grow in a city where office space has become something of a scarce commodity.
“Creating jobs is so important,” Boston Mayor Martin J. Walsh said at a celebration of the building Thursday. “We’ve built a lot of tall buildings in the city of Boston in the last few years. Most of them have been residential. Now we’re building something that’s going to help draw more businesses here.”
The $900 million tower is part of a larger redo of the hulking garage above Congress Street, which will include a 480-foot-tall apartment tower — work on which is underway — and a few smaller buildings on a plaza where the Haymarket bus station is now. About half of the garage itself will stay, serving as a sort of foundation for the buildings, which will rise around and above it. Walsh and other speakers Thursday pointed out how the complex will knit together several downtown neighborhoods that have long felt cut off by the Brutalist-style concrete structure.
“Buildings like this change cities and make them better,” said Oliver Carr, CEO of Carr Properties, a Washington, D.C.-based real estate firm that’s investing in the $900 million project along with National Real Estate Advisors — a subsidiary of electricians union pension funds — and veteran Boston development firm The HYM Investment Group. “It only works if you have a tenant.”
At One Congress, that tenant will be State Street, which said in January that it will lease 510,000 square feet in the building’s lower floors. The company will move its headquarters, and about 2,500 employees across downtown from One Lincoln, where it moved to in 2005.
“State Street is honored to make history in Boston again as the anchor tenant of One Congress,” CEO Ron O’Hanley said. “We are today a global company with offices in 28 countries around the world, but throughout our history we have always been headquartered in Boston.”
State Street’s lease is the latest, and one of the largest, in a string of recent deals that have launched construction on several big office buildings in Boston. A few blocks away, Verizon has leased most of a 31-story office tower under construction atop North Station. Akamai and Google have each inked deals for new towers in Cambridge’s Kendall Square, where the Massachusetts Institute of Technology also has two new office buildings underway. And in the last few weeks, Amazon and MassMutual each celebrated groundbreakings for new mid-rise buildings in the Seaport.
All told, there’s at least 6 million square feet of office space under construction in downtown Boston and East Cambridge, according to data from Perry Research. And while much of it is already spoken for, some of it is not, such as the upper half of One Congress.
HYM managing director Tom O’Brien said he’s met with “six to 10” companies about space in the building. While another State Street-sized lease is unlikely, O’Brien said, he is optimistic that it will sign several smaller tenants to fill the building long before it opens.
Developers of another major project — Winthrop Center — say they, too, are optimistic about the office market. That building, which is under construction and is expected to cost $1.3 billion, will feature approximately 750,000 square feet of office space, but also will feature condos on its upper half. Real estate brokers say there are several companies in the market for large blocks of space — more companies than there is space.
Still, building without a tenant signed — “on spec,” as it’s called in the industry — is risky, and historically rare in Boston, where developers have tended toward caution ever since many were burned in the deep recession of the early 1990s.
Those who are pushing ahead on spec now, city economic development chief John Barros said, are doing so because they see a pipeline of potential tenants who are looking to secure space more quickly than the three to four years it takes to build from scratch. By starting without a tenant, he said, they can stay ahead of a market that’s moving fast.
“Today’s companies don’t want to wait that long before they move in,” Barros said. “There is some downside risk. But there’s also a lot of opportunity.”