While demand for all types of retail product has been strong over the past few years, investors continue to have a strong appetite for Boston area grocery-anchored shopping centers in 2015 despite meaningful changes to the food distribution industry. The competitive landscape for traditional supermarkets is evolving as value-oriented grocers such as Market Basket, Walmart, Trader Joe’s, Aldi, and Save-A-Lot lure away price-conscious customers, while service-oriented formats such as Wegmans, Whole Foods and Roche Brothers are expanding and gaining market share with more affluent customers. These chains achieve success by targeting the low- and high-end niches of the market. According to IBISWorld, the online grocery sales industry is projected to increase approximately 9.5 percent annually to become a $9.4 billion industry by 2017. Companies such as Amazon and Walmart are increasing their capabilities for selling food and beverages online, and Ahold’s Peapod service continues to expand in an effort to maintain its position as the leading Internet grocer. The food distribution industry has been further saturated by big-box retailers and national pharmacy chains offering a growing selection of packaged goods and dairy products. These non-traditional grocers and e-commerce providers derive much of their profits from non-food items, allowing them to …
Young professionals are flocking to Boston to find higher-paying jobs generated by fruitful healthcare and technology industries. Pharmaceutical companies like GE Healthcare, Amgen and Novartis AG are expanding in Boston and Cambridge. In addition, professional, business services, education, and health services sectors have all surpassed pre-recession employment. In 2015, companies in Boston are projected to create 43,000 new jobs, which is a 1.7 percent annual increase. The increased pace of hiring will support household formation and elevate the area’s housing demand. The Greater Boston region is experiencing one of its largest residential building booms in recent history. Most of the area’s proposed and under-construction residences are apartments and many of them are on the luxury end, including the Ink Block and Troy Boston on the South End, and the Zinc in East Cambridge. Multifamily inventory will expand 1.6 percent this year, resulting in a total delivery of 7,250 new units. Many potential homeowners will choose renting over buying as more and more potential homebuyers prefer short commute times and the lifestyle that renting offers — a growing trend across many of the country’s major metros. Nationwide, apartments outperformed expectations for 2014. The national vacancy rate dipped as low as 4.2 …
By all measures, 2014 was the strongest year in recent memory for the Boston office market. With an approximate 1.8 million square feet of positive net absorption, nearly 5 million square feet of tenant demand, and continued development around the city, Boston remained one the country’s strongest markets. It’s not news that proximity to parking, public transportation, restaurants, bars and other amenities keeps employees happy. But Boston’s escalating prices mean cost-conscious companies must evaluate their downtown options — which means they have begun trading other items of importance, such as locational cachet, space configuration, look, feel and ultimately building type, for access to amenities. As a result, if 2013 was the year of the Seaport, then 2014 was the year of Downtown Crossing (DTX). With the renovation of 10 Summer Street and Havas’ 120,000-square-foot move to the Millennium redevelopment complete, other companies have followed suit. The third and fourth quarters brought more than 250,000 square feet of deals to 500 Washington Street. Carbonite and Sonos took 52,000 square feet and 170,000 square feet, respectively, in the third quarter, while Safari Books Online took 30,000 square feet in the fourth. Prominent national non-profit Year Up also consolidated its headquarters near DTX …
While it was unfortunate to see retail vacancy in Eastern Massachusetts on the upswing during 2014, it was more than offset by new retail construction as major development resurfaced. At year-end, total retail inventory was 191.6 million square feet, an increase from the prior year of approximately 2.1 million square feet. Vacant retail space in the region was up more than 1.3 million square feet, due to major contractions and liquidations such as Building 19, Dots, and Shaw’s Supermarkets. Net absorption ended the year ahead by 712,500 square feet. The 10 towns with the greatest retail supply remain in place from a year ago with one exception: thanks to new Walmart Supercenter and Sam’s Club locations, Fall River replaced Peabody. The top retail hub is Boston, followed by Cambridge, Natick, Brockton and Framingham. Among communities with at least 500,000 square feet of retail space, five towns broke into the top 10 with lowest vacancy rates: Foxboro, Hingham, Hudson, Danvers, and Everett. Abington remained at the top with a 1.2 percent vacancy rate. Foxborough made the biggest leap — up from 58th last year — as the result of Patriot Place filling significant vacancy, and Ocean State Job Lot opening in …
The Boston apartment market ranked among the nation’s top cities for revenue growth throughout much of 2013 and 2014. Apartment developers took note of the region’s strong revenue performances and construction levels ramped up, reaching over 7,000 units during the past four quarters. Construction has remained elevated and supply volumes have increased, but not outpacing demand of more than 8,000 units per year. The new luxury apartments provide a lifestyle that is very attractive and, in many cases, comparable to condominium living for would-be buyers who are now renting when faced with few options for buying the limited supply of new condominiums. Luxury apartments offer an excellent alternative and a lifestyle experience that is more akin to condo living than what previous rental buildings offered. Boston has needed new rental inventory for some time now, given that 60 percent of the existing apartment inventory was built prior to 1980. Many of the new luxury buildings feature condo-style finishes, state-of-the-art amenities and services, windows that open, high ceilings, and updated systems. These new buildings also offer a greater variety of floor plans that better address the needs of millennials and professionals who are flocking to downtown Boston for jobs and social …
Boston is known for its top-notch universities that spawn world-class technology, pharmaceutical and bio firms, not to mention its leading money management and financial services base. These factors support one of the most vibrant office, residential and retail markets in the nation. Often overlooked, Boston’s industrial market may not be as glamorous as gleaming new office and multifamily projects rising along the waterfront, but its steady performance and strong recovery are impressive nonetheless. Vacancy in Boston’s 117 million-square-foot industrial market declined 1 percent between the second quarter of 2013 and mid-2014, from 13.2 percent to 12.1 percent. A paucity of new construction and deliveries suggests further vacancy declines. Only 41,000 square feet of industrial product has been delivered through midyear, and 76,000 square feet was under construction at that point. Looking ahead slightly, the industrial market is on track to absorb approximately 1.4 million square feet in 2014, with 680,000 square feet of absorption recorded through June. This total would exceed 2011 and 2012 totals but trail 2013’s 1.8 million square feet of net absorption. Boston’s Bread & Butter and E-commerce High land values and competition from markets such as Central and Northern New Jersey, which can serve broader populations …
If 2013 was considered a year of great health in New England retail real estate, we’ll likely need to craft stronger superlatives to describe 2014. Exciting new projects circling metro Boston, rising retailer demand, and a flood of capital chasing retail centers were consistent stories throughout 2013 and will only amplify in 2014. Surprisingly quiet during the prior decade, grocers are now driving much of the activity and creating the lion’s share of the retail headlines. With Whole Foods inhaling five Food-master stores, opening in Lynnfield and exploring any other site that comes available and with Wegmans committed in the Fenway, set to open in Burlington and Chestnut Hill and construction finally underway in Westwood, stories of supermarket growth were ubiquitous throughout 2013. The recent announcement of a new Star Market at North Station provides evidence that the new entity behind the Shaw’s chain may have quickly turned around the grocery operator’s downward spiral while the team at Roche Bros. surprised many in the industry with a small store in Medfield and an urban store to join the Millennium Tower project at Downtown Crossing. And Market Basket? Here’s to hoping that 2014 provides a clearer path for the powerhouse local …
Metropolitan Boston continues to enjoy robust economic expansion and exceptionally strong real estate fundamentals. Strength in local housing prices, wages and consumer confidence demonstrated during 2013, coupled with low inflation and increases in consumer spending, will enable the economy’s growth to continue well into 2014 and beyond. With an unemployment rate among the strongest in the U.S. (7.1 percent as of November 2013), Massachusetts continues to thrive due to the presence of world-class educational, medical and research institutions. State GDP grew an estimated 3.5 percent in the third quarter of 2013, according to MassBenchmarks, following a revised 1.7 percent increase in the second quarter of the year. The publication forecasts 3.4 percent growth in state GDP from October through March. Commercial real estate saw falling vacancies, rising rents and new construction across most property types. In 2013, 5.5 million square feet of new inventory was delivered, including 3.1 million square feet of multifamily residential and 1.9 million square feet of office. More than 16 million square feet is under construction — three times greater than the previous five-year average in metro Boston — including 7 million square feet of multifamily residential, 6.9 million square feet of office and 2.2 million …
Metropolitan Boston continues to enjoy robust economic expansion and exceptionally strong real estate fundamentals. Strength in local housing prices, wages and consumer confidence demonstrated during 2013, coupled with low inflation and increases in consumer spending, will enable the economy’s growth to continue well into 2014 and beyond. With an unemployment rate among the strongest in the U.S. (7.1 percent as of November 2013), Massachusetts continues to thrive due to the presence of world-class educational, medical and research institutions. State GDP grew an estimated 3.5 percent in the third quarter of 2013, according to MassBenchmarks, following a revised 1.7 percent increase in the second quarter of the year. The publication forecasts 3.4 percent growth in state GDP from October through March. Commercial real estate saw falling vacancies, rising rents and new construction across most property types. In 2013, 5.5 million square feet of new inventory was delivered, including 3.1 million square feet of multifamily residential and 1.9 million square feet of office. More than 16 million square feet is under construction — three times greater than the previous five-year average in metro Boston — including 7 million square feet of multifamily residential, 6.9 million square feet of office and 2.2 million …
Boston is at the beginning of an unprecedented demographic shift and the strongest fundamentals we have seen in over a decade. With just under 4,000 units a year scheduled to deliver through 2016 and more than 7,000 renter households being created annually over that same time period, we are not building enough units to meet this wave of demand. Boston is the Place to Be The Boston multifamily market remains ones of the best-performing markets in the country. As a result, institutional investors view Boston as one of the top three most desirable markets, alongside New York and San Francisco. Their eagerness to deploy capital into Boston multifamily has resulted in unprecedented asset pricing and has stimulated new development throughout the region. Institutional developers such as Hines, Jefferson Apartment Group, Mill Creek and Gerding Edlen have started their first projects in Metro Boston. Additionally, historically prolific developers in the area such as AvalonBay, Hanover, Criterion, National Development and Wood Partners have continued to build on their success. Solid Fundamentals Relative to most cities, Boston’s employment remained insulated through the downturn thanks in large part to a heavy concentration of jobs in healthcare, high-tech and life sciences. These sectors weathered the …