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High-tech firms find fertile turf in South Boston

Low rents, amenities boost Innovation District

By Michael B. Farrell
Globe Staff / January 23, 2012
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It’s not Kendall Square. Not yet.

But two years after Mayor Thomas M. Menino branded a swath of the South Boston Waterfront as the Innovation District - a bid to lure big Web companies and start-ups alike - a healthy crop of technology companies is moving in.

Office rents are low, at least for Boston, and the neighborhood is catching on; any company looking for space in the city is looking there, real estate brokers say.

As Menino mentioned in his State of the City address last week, 100 companies and 3,000 jobs have come in, bringing a laptop-toting crowd to an area long known for its gritty working seaport and artist studios.

Those who work there say it still lacks some essentials, like a grocery store, and it has yet to attract technology mega-companies like Google Inc. or Microsoft Corp., as Cambridge has. But there is a real scene sprouting in the Innovation District.

“When I first got down here, you wouldn’t see anybody else,’’ said Ted Morgan, founder of Skyhook Inc., a navigation software company that opened there in 2005. Back then, he couldn’t get a good Internet connection, he said, but “now, there are too many people, and not enough places for lunch.’’

The Innovation District umbrella covers a disparate collection of smaller neighborhoods and development clusters, including Fort Point, which is a dense section of industrial buildings developed in the 1830s, parts of the Financial and Leather districts, Channel Center, Fan Pier, and Liberty Wharf.

Within that urban landscape - home to the Boston Convention and Exhibition Center, Marine Industrial Park, and the Bank of America Pavilion, as well as numerous vast parking lots - there are plans to add more than one million square feet of new construction. About a dozen development projects are under consideration or have been approved by the Boston Redevelopment Authority, including such office towers as the $800 million Fan Pier project for Vertex Pharmaceuticals Inc.

“The challenge is providing more continuity among the many pockets of the district,’’ said David Beisel, a partner at NextView Ventures , an early-stage investment firm that opened on the edge of the Innovation District in 2010.

Beisel was drawn there when he started noticing a growing number of young companies locating in the area’s converted warehouses and lofts.

Two start-ups Beisel’s firm has funded, TurningArt and Boundless Learning, have joined the wave of new tenants, including the electronics reseller Gazelle, the French firm Aldebaran Robotics, and collaborative work spaces like Bocoup Loft and Greentown Labs. Brightcove Inc., a Cambridge digital media company with about 300 employees, is expected to arrive this spring.

Comparisons between the Innovation District and the Kendall Square tech hub in Cambridge have been inescapable, but Boston officials say the real rivals are big cities like San Francisco and New York City, which promote themselves to young technology companies to bring in more jobs.

John Harthorne, chief executive of MassChallenge, the annual start-up competition that has its offices in the Innovation District, said the neighborhood is coming along surprisingly well, considering how tough it is to create a tech cluster from scratch.

“It’s really difficult to do this,’’ he said. “It’s a many-sided, chicken-and-egg game. People don’t want to move to a neighborhood that doesn’t have any restaurants, and restaurants don’t want to move to a neighborhood that doesn’t have any people.’’

Yet the restaurants are arriving. On any given weekday, it can be difficult to find a spot at the lunch counter at Sportello, the high-end Italian dining spot that restaurateur Barbara Lynch opened in 2008, although it’s hard to know whether that’s because of the neighborhood or Lynch, whose name may be enough of a draw to pull people from outside the area.

Lynch, who grew up in South Boston, liked the district enough to add a fine-dining restaurant, Menton, in 2010. She said she was drawn there by nostalgia for the old neighborhood and the “promising signs’’ of growth. She hopes “to continue to see a range of local businesses moving here, large and small.’’

The trick will be to keep the momentum going - as well as the buzz - before the area becomes too expensive for the start-ups it’s trying to attract. Direct comparisons are tricky, but on average, rents are cheaper in the Innovation District, said Roy Hirshland, president of T3 Advisors, a real estate consulting firm. He called the district “a real alternative to Cambridge for young technology companies.’’

“We were basically priced out of Cambridge,’’ said Jason Hanna, president of a clean-tech start-up called Coincident Inc. and cofounder of Greentown Labs, an industrial workspace that includes about 10 young companies. As commercial rents climb in the Innovation District, he said, “some of the start-ups are going to have a hard time staying.’’

But the neighborhood’s new designation is viewed with some skepticism by many longtime residents of Fort Point. The area has been through several attempts at branding, while development plans rose and fell with the economy.

“I’ve lived in Fort Point since the mid-’80s, and artists started settling here in the late 1970s,’’ said Gabrielle Schaffner, executive director of the Fort Point Arts Community. “We have always considered ourselves innovative as a community.’’

Michael B. Farrell can be reached at michael.farrell@globe.com.

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