Hot topics | Coronavirus pandemic

Eaton Vance, an investment firm, plans to set up new headquarters in Post Office Square to lease new HQ

Eaton Vance, an investment firm, plans to set up new headquarters in Post Office Square to lease new HQ

Eaton Vance is on the verge of signing a major lease to relocate to One Post Office Square, a few blocks from its present home in International Place, and a major investment firm is betting on the future of the Financial District.

The space's proper size is still being worked out, according to company chief administration officer Dan Cataldo, with the goal of concluding a deal in early 2022 and moving in early 2024. He said it's likely to be between 250,000 and 275,000 square feet, a bit less than Eaton Vance's plans for Two International Place off High Street right now.

The Eaton Vance acquisition has been the focus of Boston's commercial real estate industry for weeks, as brokers attempt to divine the future of downtown's core office district at a time when only a fraction of the people who normally work there are coming to the office on any given day. It follows similar high-profile agreements by fund managers Wellington and Loomis Sayles to stay in their current towers (although Loomis is significantly paring back the size of its home at One Financial Center).

Eaton Vance is moving into a 40-year-old skyscraper that is being acquired for $300 million facelift, removing outdoor terraces, and other modern touches. The tower, which is also owned by a real estate fund advised by investment bank Morgan Stanley, is owned by a real estate fund, according to Cataldo. One PO Square was on Eaton Vance's short list before Morgan Stanley announced last fall that it would acquire the firm for about $7 billion, and the final selection was based on

Eaton Vance will be able to customize its structure, similar to its current headquarters, which was acquired from a previous tenant, with fewer, and smaller, executive offices. This implies a bit less square footage overall.

Eaton Vance considered moving out of Boston and out of state early in its search process, according to Cataldo. However, the century-old fund firm determined it was critical to remain in the Financial District, the region's central bank, even if it would have saved money on rent somewhere else. The possible disruption for the roughly 1,200 Boston workers, wasn't worth the risk.

We felt that being down in the Financial District was important to accomplish that. Thats where our workers want to be, Cataldo said.

Cataldo said he doesn't anticipate all employees to come in five days a week once the epidemic is over. They've been coming in on a part-time basis since the start of the summer. He said the office can be 30 to 40 percent occupied on the most busy days typically Tuesdays, Wednesdays, and Thursdays and expects that numbers will increase in the coming months.

We are moving in the right direction," Cataldo stated, "It's critical for our employees to come into the office some number of days a week." "People seem to be pleased with the idea of returning, but people also like the idea of working from home. It feels like we're heading in the right direction.

The downward trend for legacy employers such as Eaton Vance, according to Brendan Carroll, research director in brokerage Cushman & Wakefield's Boston office, agreed with Cataldo about the momentum. He described the Eaton Vance lease as "tremendous further validation" of the downtown office market, after significant pessimism last year about the future demand.

For a lot of workers, It's important to note that Boston hasn't been a five-day-a-week city for a long time, for a lot of workers, Carroll added. The real issue is whether or not we'll return to something comparable to what it was in 2019. Thats becoming increasingly likely or possible, he added.

According to Perry CRE, a local firm, the office market collapsed out in the previous few months, but there are still numerous empty spots to be filled. About 22.5 percent of the 31 million square feet of office space in the Financial District was available for rent as of the end of September, with about one quarter of that space available through sublease. Theres more than 3 million square feet of new office construction or gut renovations like One PO Square launched before the pandemic that's now coming on the

Whats going on is these huge tenants are evading existing buildings and into new construction and opening up holes in the existing product, Ashley Lane, a senior vice president of Perry. Who is going to backfill that area?

Jon Chesto can be reached at. Follow him on Twitter.

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