Springfield Positioned to Relieve Stranglehold Presently Gripping the State’s Capital
Two great news articles recently published in by Inc. Magazine and the Boston Globe focus on the attributes of Western Mass and Springfield for starting a new business or relocating an existing one. Clearly, a great case can be made for small businesses to put their stake in the ground in Springfield. According to Inc. Magazine, “The City is continuing to develop as an urban business center, in particular for true small businesses.” National real estate consultant, Newmark Grubb Knight Frank, listed the 10 biggest selling points in Springfield, MA, are proximity to major population centers, transportation logistics, higher education, and low cost of living and housing.
Springfield made Inc. Magazine’s list for being one of the top 2 cities in the country to start a business. Those of us who have been working in Springfield for decades will no doubt be stunned by this recognition. The headline in the article by columnist Joan Vennochi accurately suggests that the solution to Boston’s housing and congestion crisis is in Western Mass. While the Globe article contrasts the huge disparity in housing prices, it neglects to make the case that the business property in downtown Springfield and elsewhere in Western Mass is only a fraction of what it costs in Boston. The article would suggest that the low cost of housing and little or no congestion in this part of the state could be the answer to the housing and congestion epidemic in Boston. I believe both articles are correct for similar reasons.
From the standpoint of pure economics, one of the attributes of Springfield that, while absent from the Boston Globe article, is Springfield’s significantly lower occupancy cost and availability of over 600,000 square feet of class A and B office space in the central business district.
Many site selectors and CEO’s dismiss Springfield, citing the unavailability of talent in our region vs. the abundance of human capital in Boston as their justification for leasing space for five times what comparable space would cost in Springfield. To underscore how outlandish this is, I submit the following:
By way of illustration, a typical 10,000 square foot Class A office leases for a minimum $65 per square foot in Boston’s Metro center, or $650,000 annually. In Springfield, comparable space at the Mass Live Building, for example, costs approximately $18.00 per square foot, or $180,000 annually– a savings of $470,000 a year (not including parking). Over a 5-year lease term, the savings would be a staggering sum of $2,350,000.
Boston parking, if you can find a spot, is around $45 per day, or double the most expensive garage in Springfield. Many Springfield businesses in the central business district enjoy free parking in the MGM garage. And buildings like 1350 Main Street offer valet parking at less than half of what it costs in the self-park garages in Boston’s Metro area.
It has been well reported, and the Globe article concurs, that the traffic and congestion in and around Boston, not to mention the lack of affordable housing, has reached epidemic proportions and will strangle the business community and new growth in the State’s capital. Companies that rely on commuting workers who are directly facing housing and transportation challenges are adversely affected. Ironically, the labor markets that they so heavily rely on can’t make it to the office on time or find affordable housing. Boston’s growth comes at a cost and new growth is not sustainable without major transportation infrastructure changes or a better idea.
As far as traffic and congestion is concerned, it doesn’t exist in Springfield and the housing stock is less than half of what it is in the Boston suburban markets. Springfield is geographically well positioned for distribution due to its relatively proximity and access to New York, Boston, Providence, Albany and Hartford.
There is a better idea.
In 2009, Springfield was ranked 24th most important high-tech center in the U.S. with approximately 14,000 high tech jobs. Baystate Health’s Tech Spring Innovation Center located at the MassLive Building at 1350 Main Street was cited by Inc. as one example of how Springfield achieved this recognition. Tech Spring is a technology, innovation and healthcare think tank. Valley Venture Mentors, also in downtown Springfield and mentioned in the article, is a non-profit dedicated to providing expertise and funding through their mentorship programs. Both organizations are rooted in the downtown and recognize and support the entrepreneurial spirit and human capital we have in our city and region. In the case of 1350 Main Street, as managing agent, we have purposely repositioned this property such that it would attract a community and culture of innovation that would lure companies like Tech Spring in the first place.
Businesses in Springfield can tap into the deep reservoir of skilled and educated labor in our region. The good news is that Hartford, the capital of Connecticut, lies only 24 miles south of Springfield on the western bank of the Connecticut River. The Hartford Springfield region also known as the Knowledge Corridor is now connected by a commuter rail making 12 round trips a day. The corridor has over 160,000 university students in over 32 universities and liberal arts colleges; the second highest concentration of higher learning institutions in the U.S.
Springfield itself is home to eight colleges – Springfield College, Western New England University, American International College, Springfield Technical Community College, BayPath University, UMass, and Cambridge College. And Holyoke Community College enrollment includes a high percentage of Springfield residents. There are 25 universities and colleges within a 15-mile radius of Springfield including some of America’s most prestigious universities, as well as numerous highly regarded hospitals like Bay State Medical Center and Mercy Hospital. The opportunities that exist for Boston in Springfield not only include inexpensive, high quality residential and business property, but also the pool of talent that are graduating from these colleges and universities. The East/West rail would bring additional talent and businesses to Springfield to take advantage of the affordable cost of living and doing business here. The Hartford-Springfield commuter rail further enhances accessibility to Springfield from all points along the Knowledge Corridor.
Given the potential skilled work force represented by the 160,000 students in our region, big businesses should also be looking at Springfield to lower their occupancy costs to be more competitive. A compelling case can also be made for state agencies that are now concentrated in the high rent district of Boston to take advantage of the low cost of real estate in Springfield and Western Mass. An analysis should be done by the State Comptroller’s office to see what state agencies don’t need to be in Boston. Millions of tax dollars could be saved and at the same time making available new opportunities in Boston for businesses that need to be there, while the abundant office space in the western part of the State, especially Springfield, could be optimized, yielding higher paying job opportunities for the region.
Businesses, small and large, in both the private and public sector, need not look any further than downtown Springfield for their address. We are not just a top city to start a business, as the Inc. Magazine article suggests, but one that existing businesses could relocate to in order to take advantage of the human capital and inherent economic benefits that will not only fuel economic development in Western Mass, but also relieve the stranglehold presently gripping the state’s capital.