Two prominent nameplates in Boston are making some big real estate moves with plans to relocate their corporate headquarters, with one stepping in to fill the space that the other is leaving behind.
Sports betting giant DraftKings and furniture retailer Wayfair both finalized deals to consolidate their offices in the city. The deals underscore broader business issues facing both companies while affirming, at least for now, their commitment to maintaining physical space.
DraftKings is preparing to move from its current headquarters in the city's Back Bay area to a slightly smaller space in a downtown high-rise. The company, which has seen its revenue slow, finalized a deal for its roughly 103,500-square-foot headquarters at 225 Franklin St., downshifting from its current footprint of about 125,160 square feet in the Back Bay building at 222 Berkeley St.
That soon-to-be-vacant space is already spoken for, with Wayfair stepping up to fill it as part of the company's plans to further consolidate its office footprint in the area.
The retailer plans to leave its longtime headquarters in the 4 Copley Place complex, as well as some nearby office spaces, to move all of its regional employees to the Berkeley Street property, which also shares a 500 Boylston St. address. Wayfair's local workforce has dropped considerably over the past few years, from the more than 5,000 people it employed in the years leading up to the pandemic to about half that number after a recent round of layoffs.
The company said this year that it would lease about 1.3 million square feet of office space in the Boston area, but with the new headquarters move, that total would amount to far less once the relocation is realized. A Wayfair spokesperson said the company would lease about 340,000 square feet for its new Back Bay headquarters, enough space to accommodate its roughly 2,500 Boston employees as well as provide the flexibility it needs for future growth.
The two companies are preparing to officially occupy their respective headquarters sometime in 2027.
A spokesperson for Oxford Properties, which owns both properties, declined to provide additional details to CoStar News about the DraftKings deal, but said its agreement with Wayfair is a "partnership that we're excited to grow now and well into the future."
Trading spaces
The relocations both mark an inflection point for Boston's office market, coming after an extended period in which the region struggled to regain some of its pre-pandemic momentum. After availability rates spiked to record highs and landlords struggled to fill vacancies in the face of decimated demand, a procession of high-profile deals has bolstered optimism that the region has finally turned a corner.
To be clear, the market's availability rate is still stuck at about 19%, according to CoStar, largely because of the more than 13 million square feet of sublet space available. That has weighed down the market and reflects muted demand among tenants that had previously fueled the city's leasing and investment momentum.
But the flurry of large deals over the past few months shows that green shoots are beginning to emerge across the city. Major corporate tenants such as BNY, WilmerHale, Datadog, JPMorgan Chase and Hasbro have signed on for large blocks of space or are on the hunt for prospective options.
For Oxford, the two leases show the landlord's recent upgrades to its portfolio are paying off. The Canadian landlord has put a significant amount of capital into renovating its 33-story Franklin Street tower, overhauling the amenity space to include a zen garden, cafe bar and lounge, a streetscape terrace and other perks that ultimately helped it land the deal with the sports betting company.
"DraftKings remains deeply committed to Boston where we have built and grown our company," Stephen Miraglia, a DraftKings spokesperson, said in a statement. "This new space will reflect the evolution of today's work environment featuring modern amenities, convenient access and a design that meets the dynamic needs of our employee base."