In Boston’s latest union of old and new, a leading venture capital firm that focuses on financing Internet companies has agreed to lease the former Exeter Street Theater building, one of the city’s most venerable architectural treasures.
The investment group, idealab!, is a California-based firm that has been spreading its wings eastward. Two weeks ago, the firm announced the opening of a New York office, explaining in a press release that the move was designed to answer the growing demand in the region for idealab!’s … expertise and assistance in identifying, creating and operating successful Internet businesses. Until the opening of the New York branch, idealab!’s offices were confined to Pasadena and Silicon Valley.
Company officials did not return phone calls by Banker & Tradesman’s deadline, but sources familiar with the deal noted that the Hub address will give idealab! a presence in one of the nation’s hottest high-tech meccas. Idealab!’s prime competitor, CMGI, is also based in the Bay State, the source noted, adding that may have been a motivation as well.
Also not commenting were officials with TMW, the Atlanta-based investment advisory firm that owns the five-story building. TMW represents a German syndication group that has been active in Boston for the past several years. Mark Browne, the broker handling the space on behalf of TMW, also declined comment on the matter.
Despite that, one source insisted that the lease is signed, estimating that idealab! will take about 25,000 square feet in the building in space vacated last year by Waterstone’s Booksellers. Another source said the agreement is for 10 years and exceeds $50 per square foot, making it one of the priciest rental rates in the Back Bay market.
It’s a great deal and a tremendous tenant, the source said of idealab!. They are very high profile, and it’s going to be very rewarding for the city.
The idealab! agreement also ends an arms race of sorts among companies vying for the space in what is one of the area’s strongest office markets. According to Meredith & Grew, the Back Bay currently sports the city’s tightest vacancy rate at just 1.7 percent, a figure that does not take into account several recent deals that should constrict supply even further. Holland & Knight recently announced, for example, that it will take 130,000 square feet at 10 St. James Ave., while the Federal Home Loan Bank of Boston reportedly is close to signing on at 111 Huntington Ave. Currently located at One Financial Center at South Station, the bank will reportedly take 60,000 square feet in the tower, which is being developed at the Prudential Center by Boston Properties. Towers Perrin is also said to be zeroing in on 111 Huntington Ave.
It attracted a lot of attention, one Boston broker said of the Exeter Street property, noting that the building offered one of the district’s largest blocks of contiguous space. Among the firms that had pursued a deal in the property was Staples, the office supply store. Staples had even met in January with the Back Bay Architectural Commission to see what signage it could place on the facade. Virgin Records had also expressed interest in the building, while Video Express did ink a deal for the top floor.
Retail Troubles
If the deal is consummated, it will end the latest chapter in the building’s eventful existence, one that includes a listing on the National Register of Historic Places. Designed in 1884, the Romanesque structure features a 2,000-pound copper steeple and a constitution of brownstone and granite. From 1913 until the early 1980s, most of the building functioned as a movie theater until being shut down amidst a swirl of controversy. It later became a home goods store, survived a devastating fire in 1995, and was home to Waterstone’s from 1991 until 1999.
Marianne Abrams, executive director of the Back Bay Association, said last week that she was unaware of whom the new tenant was, but said she had heard it was an office use and not a retail establishment. Despite the property’s prominence in the heart of the Back Bay, Abrams noted that retail never seemed to do well in the property, although the retreat by Waterstone’s last year was more tied to the British firm’s decision to abandon its United States operations rather than site-specific shortcomings. Although she had never heard of idealab!, Abrams wished the firm good luck in coming to the Back Bay.
I hope they will be very happy there, Abrams said. It’s a lovely old building.
