SIOR EOY Focus on Office Sector Touts Distinctive Design, Amenities for Successful Operators

BOSTON — Owner-operators of Greater Boston’s premium office space are responding to the evolving workplace with a more measured, customized approach to office design as businesses grapple with strategies to attract and retain talent and increase office utilization. That was one of the key takeaways from the SIOR New England Chapter’s panel discussion at the 3^rd Annual End-of-Year Market Review held last week at the 100 Federal St. auditorium, before a gathering of over 200 attendees.

The discussion was moderated by Avison Young principal Michael Dalton, SIOR, and included Bryan Koop, executive VP for the Boston region of BXP (formerly Boston Properties), the largest office REIT in the U.S.; Alex Mancuso, senior director of East Coast leasing at BioMed Realty, the largest private operator of life science real estate in the U.S. and UK; Ethan Colaiace, VP of corporate real estate at Hasbro, which will complete its HQ move (700+ employees) from Pawtucket to the Seaport by the end of 2026; and Charles “Chuck” Reilly, executive VP for construction firm and event sponsor Dacon Corporation.

Access to Talent Fuels Hasbro Move

Colaiace told the audience that Hasbro’s move to Boston was necessitated by the changing nature of its business, as the toymaker is moving away from physical toys and games and “more into the digital realm,” he said. “Coming to Boston is really about accessing talent number one, and also having access to our partners (the proximity to Logan Airport). There’s probably no better talent base in America for young talent than here in Boston, and we want to take advantage of that.”

Hasbro has mandated that its employees be in the office for at least three full days, with Tuesday through Thursday at the core, as managers try to “coax people in rather than push them in.” To do so, they subleased 265,000 SF (from Foundation Medicine) at 400 Summer St. in the Seaport, a “beautiful green building and a very healthy building” (LEED Platinum certified) that hosts 30,000 square feet of neighborhood retail uses and is within walking distance of South Station. “We really have to earn the commute of our employees, so it’s not just about what happens in the building, it’s also about the policies and the things we’re going to put in place for employees to make their commute worthwhile.”

A Shift in Thinking

Koop said he and the BXP team anticipated the fundamental change in how people work well before the pandemic − which dramatically accelerated the process − but emphasized that it “isn’t a cyclical thing, it’s a disruption and it’s really hard to get a handle on.” The bifurcation between how the different types of office users (tech, law, financial services) design their workspaces has never been greater, and stresses to his team that “every company can and will have a different workplace strategy that is appropriate for them, and that’s going to make it more confusing for our industry.”

BXP’s premier office spaces in Boston (including 111 Huntington, Atlantic Wharf, and the former Hancock Tower, 200 Clarendon) are 100% leased, with tenants averaging 3.5 workdays per person and a 95%-100% utilization rate on those days, according to Koop, who added that he believes Boston will eventually follow the lead of JPMorgan (which is expected to sign a 250,000 SF lease at South Station) CEO Jamie Dimon, and mandate a return to the office for employees.

Mancuso said he doesn’t see the changes in office utilization as a “return to office,” but rather as a shift in workspace utilization patterns, and believes there will be a “generational shift” in how commercial real estate assets are used going forward. “So we’re not returning to anything,” he said. “We’re moving forward into a different era of what our business is going to be.”

One aspect of what that entails is landlords figuring out how to “earn the commute” of having the employees want to be in the space, “and if you’re just offering commodity office space, you’ve already lost,” said Mancuso. “In this day and age, you’ve got to make it so that people want to deal with the commute.”

Helping Clients Succeed

Mancuso said that property owners in the life sciences sector must recognize that they are integral to their tenants’ businesses and need to deliver the critical infrastructure that enables tenants to achieve their core mission. That means providing a frictionless delivery of services − from the initial estimate through the buildout and throughout the tenancy. “And if you’re not making it easy to transact, to execute, to build, and to occupy the space, you’ve really got to ask yourself why that is.”

Koop echoed that sentiment, characterizing office space as “a tool for our clients. They don’t want office space; What they desire is the most productive workforce, the most productive people, the happiest people, etc. We’re a tool. And that’s a big change in the industry.”

Amenities

Dalton noted that BPX’s premium locations, including Prudential Center and 200 Clarendon, as well as other Class A-plus properties such as International Place and One Lincoln, have invested heavily in amenity packages to attract tenants, and asked if the trend is likely to continue.

Koop responded that amenities should not be a “check-the-box” item but should instead reflect what tenants in the building actually need. “That’s what we’re trying to do, instead of just (doing it) because everybody else is doing it,” he said. “But I will tell you that (a thoughtfully conceived amenity package) is essential in terms of our future.” He emphasized the 200 Club’s (which includes a wellness/fitness center, lounge, and conference rooms) integral role in 200 Clarendon’s success. “Nobody believed that got an Equinox-level fitness facility that we’re providing for free to anybody in the building (would be) filled on a Saturday and Sunday, but it’s really sticky. And then the fact that they’re using our conference area instead of going to a hotel? Really sticky. And now we’ve got a bar that’s open only certain nights, but with high utilization, and it’s off the charts.”

Mancuso added that, in addition to fitness centers and other amenities that are standard in Class A buildings, adding retail elements such as a CVS, a salon, or other services that “give employees back minutes in their day” is a more meaningful amenity than a roof deck that gets used 3-4 times a year. “That to me feels like it may be the next step we can take to really offer people differentiated experiences in the workplace,” he said.

Following the panel discussion, Dalton said one of his main takeaways was that the war for attracting and retaining talent remains fierce across all sectors. “I think Bryan and Alex provided an excellent perspective (on the idea) that the workplace is really a tool for employers, a kind of vessel where ideas can germinate, people can meet, socialize, and expand their horizons,” he said. “They also conveyed the idea that they’re better operators because they understand that creating the right environment for the tenants is meaningful versus transactional.”

Hasbro, Providence, RI