Making Seaport District Silicon Valley east
DivcoWest, overseer of a stable of Silicon Valley power addresses, is buying up prime sites in Boston, Cambridge
Divco West bought the 220,000-square-foot Davenport office building on First Street in Cambridge for $79 million.
By Casey Ross
Globe Staff / August 28, 2012
Now it is trying to replicate that tech success in the Boston area by snapping up properties in the Seaport District and East Cambridge, hoping to open East Coast offices for its tenants or draw suburban companies into the city. Its executives are quite clear about why.
“Boston has always been a strong performer and we’re seeing the most robust growth occur in those particular markets,” said Keith Wallace, a managing director for DivcoWest.
The company is finalizing a $105 million deal to buy four buildings off Congress Street in the Seaport District. In Cambridge, it bought the 220,000-square-foot Davenport office building on First Street for $79 million in March, and it is among three bidders vying to redevelop the 22-story former Middlesex County Courthouse nearby.
The investments speak to rising interest in Boston by technology firms that have traditionally preferred the West Coast or sprawling campuses in the Massachusetts suburbs. In recent months, several large firms have moved into Boston’s business core, including LogMeIn Inc. from Woburn and Communispace, which relocated from Watertown.
Wallace said DivcoWest hopes to bring even more of those tenants into Cambridge and Boston, potentially adding to the area’s already impressive roster of tech-based companies. “A lot of these companies are trying to use their real estate to attract talent,” he said, “and they’re mostly doing that by locating in urban areas.”
Real estate brokers say Boston and Cambridge are becoming more attractive to a range of companies because of their growing supply of restaurants and retail shops, as well as new residences that allow workers to live within a short walk of most stops in their daily lives.
It is still difficult for large companies to build custom-made campuses in urban neighborhoods, which often involve skirmishes with neighbors and local regulators who have sharp elbows. But many are finding ways to open new offices and expand in the cities.
“Just look at what Google and Microsoft have already done in Cambridge,” said John Wilson, a partner for Richards Barry Joyce & Partners, a Boston real estate firm. “They’re putting together playgrounds for bright young employees. It’s their R & D strategy.”
Much of the expansion is being fueled by the acquisition of local start-ups. Pay Pal, the online payment division of Internet auction pioneer eBay Inc., established a presence in Boston in 2011 with its purchase of Where Inc. Last month, Pay Pal signed a lease to move its offices into International Place in Boston’s Financial District. In March, another Internet giant, Amazon.com Inc., acquired robot maker Kiva Systems Inc., one of DivcoWest’s tenants in North Reading.
DivcoWest is just one of several West Coast real estate companies to increase investments in Boston. San Francisco-based Shorenstein Properties recently bought the 461,000-square-foot Seaport Center complex off D Street. And Gerding Edlen, a Portland, Ore.-based residential developer, started construction in July of its first new complex in Boston, a 200-unit tower along A street in the Seaport.
Real estate executive Roy Hirshland said the Boston area is beginning to develop more of the social and professional organizations that have made Silicon Valley so attractive to technology firms and their workers. As an example, Hirshland pointed to the development of an innovation center in the Seaport to spur collaborations among innovative companies and entrepreneurs. Other organizations like MassChallenge also help to connect promising start-up companies with funding opportunities and potential business partnerships.
“I think Boston’s mayor [Thomas M. Menino] is hoping the growth of the technology community will help keep students and start-ups here, so they can stay in the urban core and grow,” said Hirshland, chief executive of T3Advisors, a real estate firm that represents technology tenants. “And I firmly believe that is going to happen.”
Wallace, the DivcoWest executive, said his firm does not expect to fill all its properties with technology giants. He said the firm intends to update the properties in the Seaport — the buildings include 51 Sleeper St., 300 A St., and 313 and 330 Congress St. — and market them to a range of companies.
“I think the demand in the area is being driven by technology companies,” he said. “But that’s not to say that construction, engineering, and architectural firms won’t continue to occupy space over there.”
Casey Ross can be reached at
cross@globe.com.
