Rendering of Two Financial Center in Boston’s Leather District
With the economy in crisis mode, the developers of Two Financial Center managed to get their shovel in the ground just in time.
At a time when most commercial real estate development in the city has slowed, the retail and office building is about 70 percent complete and expected to be ready for occupancy by May next year. The total project cost, including price of the land, is about $100 million.
Accounting firm KPMG has signed a lease for 115,000 square feet at Two Financial Center, or a little more than half of the 220,000-square-foot, 12-story building, and will occupy floors two through seven. The transaction represented one of the top three largest leases signed in Boston in the third quarter, according to Colliers Meredith & Grew.
The remaining floors have no tenants yet, according to John D. Miller, senior vice president of Lincoln Property Co., the project’s developer. Miller said he expects no more than 10 tenants in the building. Rates for space at Two Financial Center are in the $60 per square foot range, Miller said. The first floor will feature retail space on Essex, East and South streets.
Changing Face
Being more than half-leased at this stage might be a good sign for Two Financial, given current market conditions.
The vacancy rate for commercial real estate in Boston for the third quarter rose to 9.3 percent, compared to 8.8 percent in the same period last year. The increase occurred despite positive absorption for the quarter of 152,000 square feet, as the renovations of two buildings – 179 Lincoln St. and 10-20 Channel Center – were added to inventory, according to Colliers Meredith & Grew.
Plans for the all-brick Two Financial Center have been revised several times, much like the neighborhood itself.
Follow the Rose Kennedy Greenway from the North End to downtown, and you arrive in the Leather District, a nine-block neighborhood stretching from South Station to Chinatown.
The Leather District, dotted with Romanesque Revival buildings, once housed workshops for men making shoes, and now is host to residential, office and retail buildings.
In 2000, Two Financial’s parcel at 60 South St. was approved for a 12-story, 214,000-square-foot office building. The market tanked in 2001, and former owner Rose Associates decided to adjust, adding a residential component to the site, according to Miller.
In 2005, the Boston Redevelopment Authority re-approved the site for 162 condominiums, 7,600 square feet of retail and a 250-space parking garage.
“Rose Associaces brought the height of the building down from 16 stories to 12 stories to appease neighborhood groups, and then the residential market started to go sideways and they decided to sell,” Miller said.
Marketing Makes It
The property was “heavily” marketed by Meredith & Grew with opportunities for commercial and residential, Miller said. Lincoln purchased the land from Rose in April 2007, as a commercial opportunity.
Lincoln, along with Boston-based Suffolk Construction, Bethesda, Md.-based ASB Capital Management and Cambridge-based architect Arrowstreet, broke ground in June last year, digging down three levels to create parking for 210 cars, with 83 spaces available to the public.
The company picked up where Rose Associates left off and worked with the Leather District Neighborhood Association to iron-out the project details, which included bringing in retail and donating money to a park in Chinatown.
“The LDNA is a very vocal group, as a lot of buildings in the area have been converted to residential,” said Miller. “We’re hoping to bring in a restaurant that will be good for the neighborhood as well as putting more people on the streets which will make it safer.”
Christopher G. Betke, chair of the LDNA could not be reached before press time. But, the group’s Web log mentions the project in the early stages back in 2007, noting that, “Essentially, Lincoln Properties contends it has purchased a ‘turnkey’ project that just needs to be built. Nevertheless, Lincoln Properties has expressed a willingness to come to the LDNA meeting Â… and make a presentation regarding its project.”
