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BOSTON’S RETAIL REFLECTS CITY’S GROWING AFFLUENCE

For nearly a century a brass marker outside the former Filene’s flagship store in Boston has proclaimed the spot to be the Hub of the Universe — a touch of hometown flummery that has always been an easy target for those who think the tweedy New England city a bit of a backwater. These days, though, Boston is nothing to scoff at. The biotechnology and financial services industries and the city’s institutions of higher education have ushered in an era of affluence, and nowhere is this more evident than in the city’s retail.

Boston’s two hottest High Streets, Newbury and Boylston, are jammed with upscale locals, students and tourists. The Shops at Prudential Center, anchored by Saks Fifth Avenue and Lord & Taylor, is pushing full occupancy. A short stroll away Simon Property Group’s Copley Place recently added a BCBG Max Azria, a David Yurman and a Salvatore Ferragamo to a lineup that already included Neiman Marcus and Tiffany. Every city should be such a backwater.

Nor is the action confined to Boston proper. Simon’s Mall at Chestnut Hill, in Newton, and its Burlington (Mass.) Mall are among a half dozen standouts, and there are more on the way. “Any type of supermarket-anchored or drugstore-anchored center is hotter than a pistol,” said Robert Shannon, a senior adviser in the Boston office of Sperry Van Ness. “Vacancies in this market are very low, and demand is very high. When something does come on the market, there are multiple bids, and, in some cases, selling prices exceed the asking prices.”

In the city proper, the rents challenge those in Manhattan. Shops on Boylston Street are leasing for upwards of $125 per square foot. Two streets north, on Newbury, which is home to boutiques, galleries and restaurants and to such star attractions as Chanel and Giorgio Armani, is fetching rents in the $200 range.

The growth shows no signs of abating. Apple Computer is building a glass-fronted, four-story outlet on Boylston, across from the Prudential Center, a radical design in a city known more for brownstone and marble. The new retailers in the area include Best Buy, Borders and H&M. For those in the retail brokerage business, these are heady times. “This is the golden age of retail,” gushed one broker at a national firm, who asked not to be identified. “For every retail space that’s open, there are two or three tenants waiting to get in. There is just tons of interest.”

What would it take to douse Boston’s enthusiasm for retail property? “A spike in interest rates into the double digits or an increase in the capital gains tax rate might cool things down,” said Shannon. With neither of those things on the horizon, though, it looks as though Boston will remain at the hub of the retail growth universe.

— Curt Hazlett