Beantown remains stable in an unstable market.

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Boston has the third largest investment management center in the world, eclipsed only by New York and London. It’s the birthplace of the mutual fund and is now arguably the “mutual fund capital of the world,” with literally trillions of dollars invested in funds managed there.

The Boston retail market has certainly had its share of woes along with the rest of the country, but high barriers to entry, its infill nature and the city's promising long-term results keep the retail market pretty strong. Boston, perhaps more than any other Northeast market, has been nearly impossible for developers to crack and has become a notoriously challenging market in which to build. Because of this, the demand for retail space has remained light, but the vacancy rate for the area is nominal, hovering around only 5 to 7 percent. Although the amount of retail space in the city has increased by 12 percent since 2003, it has failed to keep pace with demand, which has grown 19 percent during the same time frame.

Facing stiff economic headwinds, several developers have announced they will scale back on projects proposed for Boston. Earlier this year, plans for a massive urban shopping center in South Boston were put on hold. Waterside Place suffered setbacks due to financial constraints caused by the credit crisis. The $600 million proposed project was originally planned to include a 640,000-square-foot retail center, a 19-story condominium building and a 300-room hotel. Plans for the retail building are still being discussed, but they probably will include mostly apartments and a smaller number of retail stores.

Work on Westwood Station, a massive lifestyle complex once floated as the biggest and best suburban development in Massachusetts, was supposed to have started 2 years ago. Four years after plans for the 4.5-million-square-foot megaplex were unveiled, developers are still seeking crucial financing and can't say when ground will be broken on the project.

Without the new retail space and with vacancy rates relatively low, there hasn’t been a great opportunity for new retailers to enter the Boston market. However, Big Lots recently bought several defunct Circuit City box stores. Additionally, a Colorado chain of consumer electronics stores, Ultimate Electronics — which is run by the founder of Hollywood Video — has made several lease offers on 25,000- to 30,000-square-foot spaces in an attempt to debut in the Boston market. Finally, a 40,000-square-foot Nordstrom Rack store is expected to open next spring at Shoppers World in Framingham. It will be the second Nordstrom Rack in Massachusetts.

Boston is in better shape than the average United States city in terms of the impact of the recession. Unemployment is below the national average, and the city has great economic assets in the finance, education, health care and biotech industries. The relative strength of Boston's office market, its low vacancy rate and lack of new construction should help fuel a rebound in sales activity in 2010.

— Peter Belsito is an X Team International partner and founder of Strategic Retail Advisors in Boston.

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