It’s hard to imagine anyone actually cheering on layoffs and cost cutting at other firms in hopes of gaining a few additional floors of office space. But in Greater Boston’s super-tight office market, it may pay to be like a vulture when it comes to scouring the market for leads on soon-to-be-vacant blocks of office space.
After all, another company’s woes or efforts to slim down fast can present real opportunities for fast-growing firms with big hiring plans that are starved for space in which to put all their new employees.
A recent uptick in sublease space is freeing up large blocks of space that, short of new construction, just wouldn’t be available otherwise.
Among the options out there are a sizable chunk of a downtown Boston office tower, a good piece of a suburban office campus, and a large call center out on 495.
The most high profile piece of sublease space to hit the market is at One Lincoln Street, State Street’s world headquarters, where the financial services giant is looking to offload several floors in its 34-story tower, or more than 158,000 square feet of space.
The move comes after State Street’s announcement last year that it would be cutting 7,000 jobs worldwide by 2020 and a major expansion into a new building in the hip and fast-growing Fort Point neighborhood.
Next up is the 223,000 square feet of former Ariad Pharmaceutical space at 75-125 Binney St. in Cambridge that is being shed in the wake of its $5.2 billion acquisition by Japanese life sciences powerhouse Takeda. Shortly after the deal was consummated this spring, Takeda announced plans to cut dozens of employees.
In a market where available lab and office space is in the very low single digits, this is a very big block of space.
Meanwhile, Novartis, which is showing no signs of slowing down, is doing a little reshuffling of its massive real estate portfolio in Cambridge and putting 90,804 square feet of space on the market.
Two of the biggest blocks of office space on the market right now can be found in the suburbs, not the urban core.
The Shaw Group, a major engineering firm with a specialty in designing nuclear power plants, burst onto the local scene several years ago when it bought up venerable Stone & Webster, another nuke plant designer that also designed a good part of the MIT campus and which left its name on the bulky brown office building next to South Station.
Shaw, in turn, consolidated offices in Boston, Cambridge and Stoughton into an office complex at 150 Royall St. in Canton in 2011, moving 850 employees into the one-time Reebok’s headquarters, the Patriot-Ledger noted at the time.
Chicago Bridge and Iron took over Shaw in 2012, apparently triggering further changes and downsizing amid a major downturn/implosion in the business of designing and building new nuclear plants.
In case you missed it, nuclear power isn’t exactly a growth industry these days.
In a sign of the times, practically Shaw’s entire footprint at 150 Royall St. – or more than 185,000 square feet – is being marketed as empty space.
Bose, the sound system and acoustic giant, is dumping an even larger block of space at 9 Technology Drive in Westborough. More than 250,000 square feet of space is available at the showcase building, which features a two-story glass atrium.
Bose’s decision to unload the space comes after the Worcester Telegram and Gazette reported last year that the sound equipment company was preparing to lay off 200 call center employees at 9 Technology Drive and shift the work to the Philippines and other overseas locations.
The Sky Is Not Falling
All that said, let’s not get the wrong idea here – we are not looking at a surge of corporate bloodletting or some sort of harbinger of the next recession.
The amount of sublease space is still markedly below what we saw during the Great Recession and, for that matter, nowhere near the massive amounts of sublease space dotcoms and other startups dumped on the market in the early 2000s in the wake of the tech market crash.
Rather, what we are seeing is the ongoing creative destruction that is at the heart of our capitalist economy, with companies constantly rising and falling in good times and bad.
It’s all nice and fine to celebrate the big leases and announcements of developers of major new towers, but we’re in a red-hot market where there is practically nothing on the traditional leasing market in hot spots like Cambridge and the Seaport.
And the bigger news – or at least the more actionable news of practical value – may be found in the little-covered decisions by companies to cut employees and dump space.