Although recent article in The Boston Globe, “Rents soaring in city’s Innovation District”, gives the impression that the Seaport is competing head-on with Back Bay, one needs to look closely at the two markets. The majority of the increases in rents from Class A, high-rise space are from existing properties in the Back Bay, while it is the newly constructed buildings in the Seaport that are contributing to its high rental rates.
Obviously, any tenant committing to newly built office space will be paying a premium to occupy the space, due to the high costs of land and construction. More telling is the solid rental increases within the existing office building environment occurring in the Back Bay with renewals and new leases.
There is no question that the Innovation District is now on the map and is a credible locational choice for growing businesses. However, the Back Bay is the established work/play/live neighborhood that will continue to be attractive to a full range of businesses. As time goes on, demand for space (and rents) will be more similar in those districts as well as in the “new” downtown market (formerly referred to as the Financial District).
The good news is that Boston is still riding a wave of growth and construction, setting it apart from most other CBD’s in the country.