Numerous voices in commercial real estate have expressed concern about the state of the office space market in the United States, as pre-COVID leases begin to expire while demand and rent rates for those premises decline. However, it might surprise Red Sox fans that a depressed office market could impact their favorite baseball team.
Looking through plans for Fenway Corners, the $1.6 billion mixed-use project proposed around Fenway Park on Jersey Street, Brookline Avenue, and Van Ness Street, which the Boston Planning and Development Agency board approved over the summer, the impact could be sizeable. Although the project includes 730,000 square feet of lab space and 266 residential units, it also contemplates nearly 500,000 square feet of office space. These hundreds of thousands of square feet will join a Boston office market where there is a vacancy rate of nearly 20%. Fenway Corners is a joint venture between WS Development, Twins Enterprises, and Fenway Sports Group, which owns the Red Sox.
The owners of some office buildings are pursuing conversions, changing the properties to residential or lab space. However, many older office buildings do not lend themselves well to conversions, as their current configurations would require extensive and expensive renovations to be appropriate for those other uses. It is unclear how flexible the Fenway Corners plans are. Factors that govern that include their engineering plans, but also permitting concerns and potential contracts that they have with future tenants and contracts. If the office market deteriorates as many fear, Fenway Sports Group and its partners may be able to pivot the project to greater residential and lab space footprints, preserving their profit margins. If the project continues to include a large office space presence and that market tanks, this could directly impact the team the Red Sox are able to put on the field.