Is Downtown Crossing Becoming the New Innovation District?
New information from downtown Boston real estate powerhouse Cresa suggests that the next step in the evolution of DTX just might be a turn as Boston’s newest Innovation District. While the Seaport’s Innovation District has attracted a lot of tech talent to the area — and driven the demand for high-rise luxury apartments downtown — Downtown Boston has a lot of logistical advantages pulling for it. Let’s take a look at why some have taken to calling DTX the new Innovation District, and what this could mean for residents.
How DTX is Changing
Real estate prices downtown are rising. New businesses moving in come from a wide range of industries. Some are travel and tourism focused, while others involve food and drink. Shared work spaces like Black House & Co., which we’ve profiled on the blog, are also making DTX their hub in The Hub.
According to Cresa, however, changing industry profiles downtown are behind the innovation shift. Traditional industries like retail, banking, and finance are leaving DTX. In part, these institutions are consolidating and thus don’t need as large of a physical footprint downtown. Also in part, retail stores are going out of business in the era of online shopping. Hovering behind these businesses, looking for big office space and a convenient downtown location, wait tech companies and e-tailers. These businesses are getting priced out of Kendall, but are still looking to locate where they can attract the right workforce. Downtown is the perfect location right now, as the rents are cheaper — and it is close to some very attractive perks.
Businesses including PayPal and the Cambridge Innovation Center have relocated to downtown Boston, and longtime Boston businesses like Wayfair have committed to expand their operations, citing part of the reason to be accessibility. Downtown Boston’s easy access to the red, green, and orange T lines make the area very commuter-friendly. Compared with Cambridge or South Boston, which have fewer convenient T options and notoriously challenging parking, downtown just makes sense.
New Buildings Will Meet Demand — For Now
Current growth and development is strong, and this will ensure that businesses can continue to move into the downtown area. By ensuring that there is a steady stream of available office space, development has prevented commercial rent from getting too high, with more available space coming online as vacancy rates begin to fall. With so much competition, landlords must maintain affordable office space or risk losing out to those who offer more desirable rates.
While all of this is good news for the present, we have to wonder about what happens once development slows down. As of Q2 2014, Downtown Boston’s vacancy rate hovered around 11.3 percent, which is a two year low. As new businesses continue to snap up open office spaces, the vacancy rate will eventually go down even further. Downtown commercial real estate might reach a tipping point where there simply is not enough space to go around.
Downtown Boston is one of the fastest growing innovation areas in the country. Its proximity to the existing Seaport district is poised to turn the greater Boston area into a mega hub of innovation and hig tech industry. Over time, this will continue to drive development across real estate markets, bring new talent to Boston, and incentivize further modernizing of the city. Sounds like our little secret is becoming a much discussed fact…downtown Boston is the place to live, work and play in the city.