For decades, Post Office Square has been ground zero for one of the traditional pillars of Boston’s economy: the financial services industry.
Now, one of the square’s signature buildings is getting a top-to-bottom makeover, with an eye to attracting companies that form one of the new pillars of Boston’s economy: the tech industry.
The $300 million redo of One Post Office Square, which will gut the 735,000-square-foot tower and replace its brooding concrete facade with 41 stories of glass, is the latest — and most visually striking — example of the ongoing evolution in the business heart of Boston: The Financial District is becoming a tech district.
Over the past few years, as investment companies and banks, law firms and professional services companies have pared back their space in downtown towers or decamped to the Seaport, tech companies have poured in to the core of the city. The shift is evident from the backpacks and hoodies amid briefcases and suits on Congress Street and the unfamiliar names among the tenants. And it reflects a profound shift in the city’s economy over the last decade or two.
“It’s really a function of the broader evolution of Boston’s economy,” said Brian Cohen, a senior vice president at real estate firm CBRE. “We’ve seen a transformation of the Financial District, Downtown Crossing, North Station. There’s just a whole lot of demand [from tech companies] and it’s evolving very quickly.”
Examples abound across the central business district. In Downtown Crossing, the old Lafayette Place Mall is now home to audio company Sonos and cloud-data firm Carbonite. Center Plaza, near City Hall, where the FBI once had its Boston bureau, now hosts Twitter and Spotify. A building on Water Street where Fidelity Investments once reigned is occupied by online catering firm ezCater. And even high-rise towers that long housed law firms and banks are lately, floor by floor, filling with tech tenants.
To be sure, the old line banks are still around. Bank of America this year renewed its lease on a huge office at 100 Federal St., in Post Office Square. Putnam Investments relocated from One Post Office Square to 100 Federal, while downtown stalwart State Street will move from Lincoln Street to a new tower under construction atop the Government Center Garage.
But the action, said Peter Conway, market analyst at real estate data firm CoStar, is mostly newcomers.
“The big deals you hear about, they’re not banks, they’re not law firms,” he said. “They’re typically tech.”
For one thing, the region’s tech industry is booming. Boston is among the five US metro areas that have accounted for 90 percent of new tech jobs between 2005 and 2017, according to a recent study by Brookings. Tech employment in Boston has more than doubled over the past two decades, according to CoStar data, while the finance and legal industries have declined modestly.
It wasn’t that long ago most of those new tech jobs would have been along Route 128, or even farther out. But now, the vast majority are being created in the core — in Boston and Cambridge — close to universities, road and rail connections, and a huge pool of young city-dwelling workers to hire. As space in tech-heavy Kendall Square has become too scare and pricey for all but the biggest companies, startups looking for space have often found it across the Charles River in downtown Boston.
“That’s really where you have the dominant share of startups,” said Brendan Carroll, director of intelligence at real estate firm Perry. “You’re more likely now to run into a tech genius at a Sweetgreen on Summer Street than you are on Main Street in Cambridge.”
And as those startups grow, they’re more likely to stay where they were born. That’s what ezCater did. The company — which connects restaurants with businesses in need of catering services — launched in 2012 in a small office on Bromfield Street, in an area once home to many small jewelry firms.
EzCater then moved to 101 Arch St., where it eventually occupied about 50,000 square feet. Earlier this year, it jumped to a new, custom-designed, WeWork facility at 40 Water St. It’s nearly twice as big as the company’s previous digs, with room for 750 employees, an easy walk to both South and North stations, and views of Post Office Square. Given how many employees had grown used to commuting downtown, chief executive Stefania Mallett said, leaving the neighborhood was never really an option.
“I’d bet half our employees don’t own a car,” Mallett said in an interview when the company announced its lease with WeWork. “We couldn’t do a suburb somewhere.”
Tenants such as ezCater have big landlords thinking differently about their traditional downtown towers. Just as tech companies compete fiercely for workers with fun perks such as free beer, foosball, even video game rooms, the buildings that want to lease to those companies are investing in the same sorts of things.
Take 225 Franklin St., just off Post Office Square. Once known as the “State Street Tower” when it housed the financial giant, the building now has a tenant list that’s 40 percent tech, said Matt Polhemus, director of leasing at Oxford Properties, which owns 225 Franklin and several downtown office buildings. When Oxford bought 225 Franklin in 2015, it housed mostly traditional financial and professional services firms. Today, Polhemus figures 90 percent of new leases are to tech companies, such as DataRobot, which signed up for three floors earlier this year.
“That’s where the demand is coming from,” Polhemus said. “And you’ve got to make sure your building is positioned to meet that.”
For Oxford, that has meant upgrading common space to make it decidedly cooler: 225 Franklin boasts a new Intelligentsia coffee bar in what was previously a little-used corner of the lobby, and the old State Street vault in the basement — formerly a City Sports store — has been converted to a lounge and event space for tenants, complete with a golf simulator.
For One Post Office Square, the repositioning is even more dramatic. Developer Anchor Line Partners and real estate firm JLL are partnering to overhaul the entire building, blowing out whole floors, adding about 200,000 square feet of office space, and swapping the forbidding exterior for a sheath of sleek glass.
The complex redevelopment requires relocating tenants while chunks of the tower are gutted and then remade. But when it’s done in 2022, the finished product will have extra-large floor plates on the lower floors, better for the vast bullpen-style offices tech companies prefer. It will also boast seven roof decks and terraces, and far more natural light.
“We’re really focused on amenities. Everything a tenant wants their employees to have,” said Ben Heller, who heads the downtown leasing team at JLL. “We’re seeing interest from all sorts of companies.”
That includes some big-name tech firms that are looking to plant a flag in downtown Boston, said Heller — though he wouldn’t name names. Still, with so much space to lease, One Post Office Square isn’t limited to any one industry in particular. Marketing agencies, professional services firms, and, yes, giants of finance, have checked out the space as well, Heller said.
Indeed, Heller said, the reality is that all industries are becoming more tech-driven, and consequently competing for the same developers, engineers, and data analysts as the traditional tech industry. And they all want to work in the same kind of vibrant, modern offices so popular today — space that, by any other name, the Financial District is eager to provide.
“The reasons the Financial District has been successful for the last 40 years are the same reasons it is now,” he said. “You just have real estate being adapted to the needs of new tenants.”
Tim Logan can be reached at firstname.lastname@example.org. Follow him on Twitter at @bytimlogan.