For decades, the striking 55-foot atrium at International Place, with water pouring down from a glassed-in domed ceiling, has been a singular feature in downtown Boston’s office scene. The scene for countless coffee meetings. The place to bump into developer Don Chiofaro, whose eponymous firm built what is the Financial District’s largest office complex and still runs it today.
But a big change is in the works.
As soon as this month, Chiofaro plans to launch a $100 million re-do of public spaces at the two-tower, 1.8 million-square-foot downtown office complex. The investment will cover refreshed lobbies and entrances for both One and Two International Place, which were completed in 1987 and 1992, respectively.
“We really wanted to reintroduce the building to the downtown,” said Don “Duna” Chiofaro Jr., vice president of The Chiofaro Co.
The Chiofaro Co. and financial partner Prudential Global Investment Management also plan additional restaurant and retail space. The renovated atrium — dubbed “IP Commons” — will keep a signature multi-story water feature, while adding planters and other greenery for more of a garden feel. A floor that’s currently occupied by investment management firm Eaton Vance will be changed into a 16,000-square-foot tenant amenities space, or “The Aries Club,” complete with mother’s room, boardroom, bar, and outdoor terrace.
It’s a major investment in a major downtown office building at a time when Boston’s office market faces an uncertain future, with both sublease space and vacancy at their highest levels in decades as companies embrace hybrid work and scale back leases. It’s also coming as International Place prepares to lose an anchor tenant in Eaton Vance, which is vacating roughly 325,000 square feet and relocating to One Post Office Square early next year.
Eaton Vance is among a handful of financial and professional services tenants that signed new leases in 2022, along with HarbourVest, Bain & Co, and McKinsey. All are going into new or majorly-upgraded buildings – a trend today’s commercial real estate world has named “flight to quality.”
Indeed, offices that haven’t added amenities recently are often the ones struggling with higher vacancies, said Matt Daniels, the New England brokerage lead for real estate firm JLL.
“Spaces that are old, that need a lot of work, are not leasing fast, and buildings that haven’t undergone a modernization program … are struggling,” Daniels said.
This so-called flight to quality trend was a “huge” factor in Chiofaro Co. and Prudential Global Investment Management’s deciding to invest $100 million into International Place, said Don Chiofaro.
The towers are currently more than 85 percent occupied, though that number will fall when Eaton Vance moves out. It’s not the first, second, or even third time International Place has lost an anchor tenant, Chiofaro said, and he’s confident other tenants will move in. The veteran developer has seen numerous real estate cycles and slumps through his career, and said this one is little different. The key is to adapt.
“There have been multiple times when people have said: ‘the world is ended.’ And it didn’t,” Chiofaro said. “We think this is exactly right time to make the investment. There’s clearly a bifurcation and a flight to quality. … There’s going to be the best, and then there’s going to be the rest. And guess what? That’s where we want to be.”
The refurbishment, designed by architecture firm Gensler, has been in the works since before COVID-19 upended Boston’s office market. Upgrades include updated flooring and lighting, onsite daycare and dental facilities, expanded electric vehicle charging stations, bike and scooter storage and showers for commuters.
The $100 million will also go toward technology upgrades, such as remote-operated temperature controls and other HVAC updates, uninterrupted cellular service through the towers and parking garage, and a building app for tenants. The project has cleared design review at the Boston Planning & Development Agency and applied for building permits. Construction will be done in phases and take about two years to complete.