Boston Properties (NYSE: BXP) is the country's largest publicly traded developer, owner, and manager of Class A office space. Many of the office REIT's (real estate investment trust) properties define the skylines of the country's biggest cities, including its namesake Boston. Now it's redefining that view from a different angle by building the city's first observatory.
Here's a closer look at how this project will impact the company and Boston's real estate market.
It's all about the view
Boston Properties recently detailed plans for the world-class observatory and experiential attraction it has under development at the Prudential Center in Boston. The observatory, named View Boston, will have expansive and panoramic views of the city and beyond. It will encompass the top three floors of the Prudential Tower.
The 59,000-square-foot project, which will cost an estimated $182.3 million and open in 2023, will feature:
- Immersive experiential exhibits and a bistro on the 50th floor of the tower.
- An indoor/outdoor cocktail lounge and 360-degree outdoor viewing deck on the 51st floor.
- Double-height indoor viewing space on the 52nd floor.
Boston Properties designed the observatory to be a destination. It will welcome tourists and host special events and programming.
Boston Properties is the latest office REIT to feature an observatory at one of its buildings. SL Green recently opened Summit One Vanderbilt, a story-driven, immersive experience and observatory in its recently finished One Vanderbilt tower in Manhattan. Summit features an outdoor bar, an all-glass enclosed elevator, and a story-driven, immersive experience. Meanwhile, in 2019 Empire State Realty Trust completed renovations on the observatory on the 102nd floor of its namesake building.
These projects aim to turn office buildings into must-visit tourist destinations. It allows office REITs to generate additional revenue from the observatory while making the buildings even more desirable for tenants.
A new selling feature for Boston
Tourism is big business in Boston. In 2019, the city drew 28.2 million domestic visitors and another 2.4 million international travelers. They pumped $24.9 billion into the local economy, supporting 155,500 jobs. While the pandemic has had an impact on Boston's tourism sector, it has rebounded in 2021.
View Boston will give tourists another reason to visit the city. Boston Properties hopes that it will become like the Empire State Building's observatory as a must-visit tourist destination. It will draw visitors to the Prudential Center, which in addition to four office towers, is a shopping and dining destination. That steady stream of visitors should benefit those and other surrounding retail businesses.
Their spending will boost the local economy and real estate market. It will benefit retailers, hotels, and other hospitality and entertainment businesses, allowing them to pay their rent and wages, which will then flow into the housing market.
Another selling feature for Boston Properties, too
View Boston is another investment by Boston Properties on the future of office buildings. The REIT is currently investing $2 billion into new office developments across several markets. It has already leased 87% of this space to tenants. In addition, it's investing another $558 million into new life science developments and redevelopments.
The company is building amenity-rich facilities that provide space where its tenants' employees can productively collaborate and innovate. These investments should help grow the company's rental income in the future, creating value for shareholders.
Meanwhile, the observatory is a new way the company can create value for investors. It's redeveloping a former restaurant into a transformative destination. It should increase the value and appeal of the Prudential Center to existing and prospective tenants, which should enhance its long-term value. Innovative investments like that and its shift into life sciences make Boston Properties an attractive office REIT for investors to consider stocking up on for the long term.