A highly educated workforce is driving corporate growth throughout Boston, particularly in the finance, technology and medical sectors. PNC Financial Services and JPMorgan Chase have announced considerable expansions and some international companies, including LogPoint, are setting up North American operations in the Boston metro. As a result, approximately 47,100 positions were created since October 2017, building on the 39,400 jobs added in the prior 12-month period. The pace of hiring has kept the unemployment rate in the low 3 percent band, making it difficult for employers to find quality workers. Overall, healthy employment growth continues to draw more residents and underpins household formation, fueling the need for quality housing. High home prices, however, are putting homeownership out of reach for many, boding well for apartment demand. As a result, vacancy rates remain considerably tight, resting below 4 percent in the third quarter. The still tight vacancy rate is creating a shortage of housing throughout Boston, particularly for lower income households. Consequently, vacancy in Class C apartments has held below 3 percent during the past two annual periods ending in September. Effective rent in these spaces is roughly between $700 and $1,800 per month less than Class A and B spaces, …
In the greater Boston area, over just the past decade, a whole new kind of neighborhood has been popping up. From Ink Block in the South End to the Seaport of Boston and Assembly Row in Somerville, it’s no secret that retail developers are evolving with the times by shifting their focus from traditional shopping malls to integrating retail into new and dynamic mixed-use developments offering housing, retail, entertainment, office space, parking and more. But no two cities are alike. Successful developers are in the business of staying ahead of the trends in how and where people want to shop, which in turn maps them back to how people want to live, work and play. A number of major players in the area, including Wilder, have deconstructed the key elements unique to Boston that converged into the making of these new greater Boston neighborhoods. Reinventing Malls Across the country, there’s a great deal of retail space that’s become available as a result of brick and mortar store closings. Most of these old centers have desirable locations, so it really comes down to a matter of them needing to be repurposed. There’s tremendous opportunity to recreate neighborhoods and bring in housing, office space and hotels …
Greater Boston’s industrial market continued its hot streak in 2018. Positive net absorption of 350,000 square feet in 2018 marked the eighth straight year of gains. Vacancies, which ended the year at 10.1 percent, have halved since peaking at the end of 2010. Over this time, the market absorbed 17.5 million square feet and is now poised for continued growth. Tenant demand remains strong and some of the larger tenants in the market— Albertsons, Premier Distribution, Trimark, Jofran, Amazon, Wayfair, and Harte Hanks— are seeking a total of 3.5 million square feet of space. Rents are at record highs, in aggregate topping $9.50 per square foot triple-net, which factors in a space-weighted asking rent on available product. Tenants looking for product in the Urban markets are seeing rents at or above $20 per square foot triple-net, while new product in the South and West is into the $7 per square foot triple-net range. Cheaper space can still be found, but landlords have never seen a stronger rental market. Absorption Slows Despite the gains, absorption was held back by several large blocks of space coming onto the market throughout 2018. The closing of the Necco factory in Revere opened up more …
Although one of New England’s smallest geographical submarkets, spanning only 7.1 square miles, Cambridge packs a serious one-two punch between its thriving office and life science sectors. Routinely ranked as one the nation’s most densely populated cities, universities, research institutes and private corporations employ many of the 110,000 residents of Cambridge. Not surprisingly, 44 percent of those residents are highly educated millennials between the ages of 18 and 35, according to the most recent U.S. Census and American Community Survey. Those millennials form the unparalleled labor pool that has employers clamoring for talent. Hosting more than 230 life science and high-tech companies, research from CBRE suggests that Cambridge contains upwards of 700 start-ups, many of which are pioneered by entrepreneurial professionals spinning out from larger institutions. Known as the city of squares, Cambridge is divided into three distinct submarkets, each with their own distinctive flavor — East Cambridge, anchored by MIT and Kendall Square; Mid Cambridge, home to Harvard University and West Cambridge/Fresh Pond area. Collectively the city contains roughly 11.2 million and 14.6 million square feet of commercial office and life science space, respectively. Low Vacancy, High Rents Cambridge finished 2018 maintaining incredibly low office and life science vacancy …
The Boston office market continues to see established out-of-market tech users from a diverse group of industries take large blocks of space. In the Seaport District, Aptiv, a division of the car technology company Delphi Technologies, took 93,000 sq. ft. at 100 Northern Avenue. In the central business district, Spotify, a digital music service company, opened its first Boston location and leased 73,000 sq. ft. at Center Plaza. Verizon’s Oath, the digital publishing arm of the company, inked a 440,000 sq. ft. lease at North Station’s The Hub. And Bose, a consumer electronic products company, recently took the remaining available space at Boston Landing, bringing its leasing total to 145,000 sq. ft. at the project. The diversity of this new crop of tech entrants into the market solidifies the strength of Boston’s growing technology cluster. Innovators aplenty In a city once dominated by financial service and insurance firms, Boston is now home to a world-class entrepreneurial ecosystem. This is important as established companies across industries race to innovate in the digital age. The juxtaposition of Fortune 500 companies such as Optum and Amazon next door to newly funded and rapidly expanding home-grown startups such as Draft Kings and Toast makes …
The Greater Boston industrial market is busier than ever. Supply for quality warehouse and flex space is limited and the demand is at an unprecedented high. As a result, we have seen rents soar, achieving upwards of $7 to $7.50 Triple Net rent along I-495, and $9 to $11 Triple Net rent along Route 128, notable increases from just a few years ago. To coin a well-known quote from the 1989 film Field of Dreams, “If you build it, they will come,” and both investors and tenants continue flocking to the industrial real estate market in the Commonwealth, in some cases making their first appearance in Massachusetts, or in others looking to expand their presence here. Along with the usual suspects, we are seeing plenty of non-traditional industrial buyer groups as well as users who are now seeing the value in the region and asset class. While developers have experienced tremendous success to date with speculative builds, there are undoubtedly some potential risks on the horizon. Tenants are looking for clear heights exceeding 30 feet with as many loading docks as possible, a first-class inventory type that is far from common or plentiful in our marketplace. To accommodate changing tenant …
Simply put, Boston is — and will continue to be — a top destination for tenants and capital alike. With strong market fundamentals and key drivers (education, finance, healthcare, life sciences and technology), 2018 is likely to be another terrific year for the commercial real estate sector. Market Metrics Boston’s urban core comprises four major submarkets: Downtown, Back Bay, Seaport and Cambridge. Together, these submarkets total more than 96.1 million square feet of office and lab space. This sector of the market features a vacancy rate of approximately 8.8 percent, positive net absorption of more than 300,000 square feet in 2017, and rental rates that are on the rise. Boston’s urban office market is largely driven by the region’s high concentration of educational institutions, financial and professional services, healthcare, life sciences and, perhaps most important, technology. These industries excel in the Boston area due to its high concentration of knowledge workers and its spirit of innovation and entrepreneurship. Tenant In-Migration The biggest trend impacting Boston recently has been the large-scale relocations of tenants into the urban core — both from within and outside of the market. This is a trend that shows little signs of slowing down. • GE — …
From new mixed-use developments popping up in the skyline to the increase of small-format stores, 2017 saw robust growth in downtown Boston’s retail landscape. Specifically, stabilizing rental rates have led to an uptick in retail leasing activity, showing the strength of both traditional retail destinations such as Newbury Street, as well as new mixed-use developments like One Seaport Square. While the downtown retail market is poised to remain stable, 2018 will welcome new trends fueled by e-commerce and omnichannel retailers, new leasing models, shifting consumer shopping behaviors and the ongoing challenge to accommodate millennials’ evolving preferences and expectations. The Seaport’s Emergence as a Retail Destination Historically, Back Bay has served as Boston’s premier neighborhood for retail with Newbury Street as its crown jewel and nearby Prudential Center, Copley Place and Boylston, all within a few minutes’ walking radius from the famous street. While Back Bay will continue to be a hotspot in 2018, Boston’s Seaport neighborhood is breaking out as a retail destination to watch as it transitions into one of Boston’s premier work-live-play destinations. Most recently, retailers Bluemercury, Mr. Sid, TravisMathew, Filson, L.L. Bean, and Lululemon are finding the value in meeting Boston’s young professionals where they work, live and …
Over the past decade, urbanization has emerged as one of the most impactful trends to hit the real estate industry. This trend, embodied by the live-work-play concept, has been embraced by all demographic cohorts, from millennials to baby boomers and even retirees. While the impact has been most visible in the urban core, Boston’s suburbs are also being transformed, and the inclusion of pedestrian-oriented retail into new and existing projects is playing the integral role. Modernized, high-traffic retail concepts now provide the coveted ability to work, shop, dine and entertain with the same convenience of downtown while being proximate to the region’s top bedroom communities. The Polaroid Site, Waltham Waltham is Boston’s top suburban office market; however, its biggest drawback had been a lack of real amenities. Sam Park & Company acquired Polaroid’s former headquarters and planned a 1.5 million-square-foot, mixed-use development, which includes Market Basket, Not Your Average Joe’s, Flank, Starbucks and Jake n Joes Sports Grille. The existing and improving amenity package at 1265 Main immediately drew the attention of Clarks, which moved its American headquarters to a new 120,000-square-foot building on the site. MarketStreet Lynnfield Once the Colonial Country Club, MarketStreet Lynnfield is now a mixed-use development …
The commercial real estate market in the Greater Boston area continued its torrid pace in the first half of 2017. All sections of the commercial real estate market inside Route 128 are white hot, especially after the announcement that General Electric will move its corporate headquarters to the Seaport District. Recent data indicates that Boston has one of the hottest economies in the United States and ranks as one of the top economies in the world. The 2017 Investment Intensity Index ranks Boston as the fourth market in the U.S. and 14th in the world for commercial real estate investment. In the industrial sector, which includes warehouse/distribution and flex/R&D product, vacancies are at the lowest point seen in decades. At the end of the first quarter the vacancy rate decreased to 5.7 percent. Net absorption totaled 2.24 million square feet for the quarter. The fact that the urban industrial market is continually shrinking as aging industrial properties are redeveloped into “higher and better uses” has caused a tremendous displacement of companies from inside Route 128 to areas outside the coveted Route 95 corridor. A dearth of available institutional-quality industrial product exists in today’s market with just over 13 percent of …