Biggest downtown Boston lease of 2024 comes from Healey administration
The Healey administration is betting on the future of Downtown Boston by signing a 106,000-square-foot lease to bring the state’s consumer affairs and business regulation agencies to One Federal St.
The administration will lease two floors in the One Federal tower from landlord Tishman Speyer and relocate about 415 workers from 1000 Washington St. in the South End and 501 Boylston St. in the Back Bay. The 10-year lease will put the employees in the Office of Consumer Affairs and Business Regulation under one roof, according to Lisa Dixon, chief of staff of the Division of Capital Asset Management & Maintenance, which manages real estate for the state. The moves will take place over four months, starting in December.
The list of state agencies relocating includes: the Division of Banks, the Division of Insurance, the Division of Standards, the Division of Occupational Licensure, and the Department of Telecommunications & Cable. With this move, the agencies collectively reduce their space needs by 24,000 square feet, Dixon said.
“It’s a great commitment by the commonwealth to downtown,” said Jessica Hughes, a managing director with Tishman Speyer, “which has such good add-on impacts for street level retail.”
The deal between the Healey administration and Tishman Speyer comes as city and business leaders worry about downtown’s future. Downtown office vacancy rates have reached record levels this year amid the widespread acceptance of hybrid and remote work, and numerous blocks remain pockmarked with storefront vacancies as a result.
Case in point: The space that the state agencies are leasing on the sixth and seventh floors at One Federal was the headquarters of data storage giant Iron Mountain before the COVID-19 pandemic hit. In early 2023, Iron Mountain stopped listing its headquarters address as One Federal. The $30 billion company is now headquartered in an office suite on the outskirts of Portsmouth, N.H. In a brief statement, the company said the employees who had been based at One Federal now work remotely.
One Federal, a 1970s-era building, was originally known as the Shawmut Bank headquarters but has been home to a number of companies of varying sizes since Shawmut was sold in the 1990s. Arguably, its most notable feature is an outdoor park built at the building’s 9th floor, lined with trees visible from the streets below, and an indoor space that gets rented for weddings and other events.
The 1.1-million-square-foot tower occupies an entire city block between Devonshire and Federal streets. Hughes said about 80 percent of the building’s space is leased today.
Mark Fallon, director of research and strategy at real estate brokerage Hunneman, said the state agencies’ move to One Federal represents the biggest new office lease signed in downtown — and all of Boston — so far this year. Other large leases this year, Fallon said, include Converse’s renewal of nearly 200,000 square feet next to North Station for its headquarters, Bank of America’s 80,000-square-foot renewal on Morrissey Boulevard, and marketing firm Havas’s new lease for 72,000 square feet at the former GE headquarters in Fort Point. Havas is relocating from downtown.
He said 28 percent of the office space downtown is available for occupancy, including space on the market through subleases.
Michael Nichols, president of the Downtown Boston Business Improvement District, said he remains hopeful that more agencies with the Healey administration will choose to stay downtown or move there as other state office leases come up for renewal. Because of its central location and proximity to various public transit lines, Nichols said the area is ideal for agencies that interact directly with the public.
“There’s nowhere better for that than downtown,” Nichols said in an email, “and we’re pleased they’ve begun their process by moving additional offices into the heart of downtown that weren’t there before.”
Jon Chesto can be reached at jon.chesto@globe.com. Follow him @jonchesto.