Northeast Market Reports

Selling Affordability is Crucial in Metro Boston

by Taylor Williams January 22, 2020

With a pressing demand for new housing in the Boston area and communities struggling to provide affordable options to mitigate the effect of rising prices, the barriers to providing new affordable multifamily properties remain significant. Here in the Boston region, the scale of the problem is immense. Boston’s Metropolitan Area Planning Council recently declared a need for 185,000 new units of housing over next 10 or so years in the 15 cities and towns that comprise the inner core of the metro area — just to keep up with expected growth. Some of the integral variables and processes associated with multifamily development, like land acquisition and construction costs, can be tangibly quantified. But harder to define is the often unpredictable process of securing public approvals, wherein a development team must navigate the sometimes contentious ground between neighborhood groups and regulatory agencies. Locally Scaled Solutions In 2018, Related Beal completed The Beverly, a 239-unit, income-restricted project in downtown Boston, capturing headlines that heralded this significant model for addressing housing affordability in the region. Landmark projects like The Beverly represent great strides toward addressing the housing affordability crisis and have helped raise the awareness of efforts to develop real solutions to the …

January 22, 2020

Market Reports Northeast Northeast Market Reports Office

Office Landlords in Northeast Offer an Array of Amenities to Attract Tenants

by Taylor Williams January 15, 2020

In the largest office markets of the Northeast, landlords are competing to attract valuable corporate tenants by providing the highest quality work-life balance for the region’s talented workforce. The Boston, New York and Philadelphia office markets are among the most competitive in the country. While factors like salary, commute time and personal fulfilment remain important in deciding where to work, employees are now placing more emphasis on amenities and work-life balance in their final decisions. Consequently, employers are making a point to meet those demands by investing in properties with convenient access to those amenities, in particular fitness, dining and transit. According to Colliers International, Class A office asking rents in Boston rose 9.9 percent in the third quarter of 2019, commanding $100 per square foot in the city’s hottest markets. Lauren Vecchione, senior vice president in the Boston office of Colliers, says that landlords have to provide competitive amenities if they want to command and achieve the asking rents in submarkets with the strongest demand, including the Seaport, Financial District, Back Bay and Cambridge’s Kendall Square. “Larger and smaller tenants alike are focused on finding efficient spaces that allow them to build out a creative office experience for their …

January 15, 2020

Connecticut Market Reports New York Northeast Northeast Market Reports

Investors Like Fairfield, Westchester Counties

by Taylor Williams January 8, 2020

With a unemployment rate of 3.9 percent, strong demographics, transportation that provides direct access to New York City and a highly skilled workforce, Westchester County is seeing steady investor interest across all major property types. We have seen significant interest from institutional investors, including pension fund advisors, insurance companies and REITs. This same buyer class has continued to underwrite increased rent growth in the more urban markets of Westchester County — Yonkers, New Rochelle, White Plains — ranging from 2.5 to 4.5 percent depending on occupancy and development pipeline within the local submarkets. This investor group is targeting yields of 5.5 to 6.5 percent in return on cost metrics and purchasing existing assets for cap rates ranging from 4.4 to 5.3 percent, depending on the age, location and upside of the transaction. That spread has historically been between 150 and 200 basis points. Given the need to put capital to work, the spread is now closer to 100 basis points, reflecting more aggressive pricing for the market. This trend is evident in the Westchester market with new construction projects in the transportation-oriented towns. In addition, interest rates have helped keep investors motivated to buy. Low yields have helped to keep …

January 8, 2020

Market Reports New Hampshire Northeast Northeast Market Reports Office

Mass Timber Emerges as Preferred Construction in New Hampshire Office Market

by Taylor Williams December 20, 2019

If you’ve spent time in quaint New England cottages, you know that unique indoor environment can conjure feelings of warmth, happiness and comfort. Exposed wood inside of houses provides sensations of coziness and security that have been emulated in biophilic design — a term referring to the human connection with nature — across America. So why hasn’t this warm and healthy feeling spread to America’s offices? We’ve seen the mill brick buildings and the steel and concrete office developments scattered along America’s highways and suburban areas. Some of us may have even worked in them. They are reliable, cost-effective and provide tenants with the basic amenities needed to get their work done. But the American office building is changing. Today’s companies demand more for their employees and are recognizing that comfortable offices with exceptional amenities are quickly becoming the new standard to attract top, young talent. According to Cushman & Wakefield’s 2019 “CRE Perspectives on Coworking” report, nearly two-thirds of companies are utilizing some form of coworking space. Look at the most popular coworking spaces in the country — many provide biophilic design elements to keep occupants happy. In early October, building owner Farley White, along with Cushman & Wakefield, …

December 20, 2019

Market Reports Multifamily New Hampshire Northeast Northeast Market Reports

Five Ways in Which New Hampshire’s Multifamily Developers Are Making Life Easier

by Taylor Williams December 18, 2019

As the saying goes, “nothing worth having comes easy.” While this is true in many ways — especially in the real estate business — the multifamily market in New Hampshire is putting this saying to the test. Design and technology trends represent innovative ways to make life easier for new residents. The result is a revolution in convenience and lifestyle across developments from Nashua to Pittsburg and everywhere in between. Five trends in particular are driving this revolution in the multifamily space. 1. Maximum Flexibility “Flexibility” is a term thrown around in real estate now more than ever. The line between traditional commercial and residential spaces is blurry, with an ever-increasing focus on creating flexible work and gathering areas. Cubical farms are out and coworking spaces are rapidly expanding. The result is a blending of residential and commercial experiences, with office décor that feels like home and homes designed to act as secondary offices. Collaborative gathering areas, which would have been considered foreign just 10 years ago, are now a focal point in new buildouts. Tenants and developers see these spaces as “must haves,” not “nice to haves.” Flexibility also spills over to simple multifamily concepts such as package deliveries …

December 18, 2019

Market Reports New York Northeast Northeast Market Reports Office

Brooklyn and Queens: Worthy Alternatives to Overpriced Manhattan Office Market?

by Taylor Williams December 13, 2019

New York City is one of the priciest office markets in the world, with Manhattan housing the core business district of the city. The borough has always been the place to be — the ultimate live-work-play destination that houses the big corporations and the talent that recruiters look for. Overall, office asking rents in Manhattan fell only slightly during the third quarter to $74 per square foot, per Cushman & Wakefield, while rents in some submarkets continued to rise. In highly appealing office clusters like Hudson Yards or the Plaza District, asking rents often exceed $100 per square foot, meaning small- to mid-sized tenants are often priced out of these areas. Historically, areas outside Manhattan have not been as desirable for office users. Yet with rising housing prices, many New Yorkers have been priced out of the borough, forcing them to either downsize or get off the island. Developers have taken advantage of this trend and started investing in residential projects in Brooklyn and Queens in order to attract homebuyers. Businesses soon started to take notice, and many office-using tenants have since migrated or expanded into the outer boroughs, primarily Brooklyn and Queens. Small Leases Drive Brooklyn Brooklyn has always …

December 13, 2019

Market Reports New York Northeast Northeast Market Reports Retail

Price Escalation in Other Asset Classes Pushes Investors Toward NYC Retail

by Taylor Williams December 11, 2019

The value proposition for retail investment in New York City is reaching new highs amid an arguably overvalued office market and a multifamily market that continues to grapple with onerous new regulations. Rapid price escalations in both of these sectors have played an integral role in spurring additional investor demand for retail as of late. Analysis of Avison Young’s third-quarter property sales report for Manhattan revealed a rare opportunity, as the average price per square foot for retail properties has now dipped to $1,449, nearly 40 percent below the trailing four-quarter average. In addition, deal volume was also down nearly 40 percent below the trailing four-quarter average, clocking in at just $175 million. The glory days of 2014, when the market eclipsed $3.5 billion in sales volume, are well behind us. “For Rent” signs now cover swaths of the hardest-hit corridors of Broadway in SoHo, Third Avenue on the Upper East Side and Canal Street. What’s The Upshot? All is not lost, however, in the world of retail investment. In fact, it’s very much the opposite. The legislative constraints putting pressure on the multifamily investment market do not currently exist in the retail world. And with retail pricing down significantly …

December 11, 2019

Market Reports Massachusetts New York Northeast Northeast Market Reports Office Pennsylvania

Developers Adapt to Tight Office Market in Northeast

by Taylor Williams December 4, 2019

Office vacancies are falling across the big metros of the Northeast as robust user demand outpaces the supply of new construction. Deliveries in the last year have primarily been limited to Class A, build-to-suit properties and mixed-use developments. Meanwhile, office tenants are seeking high-end amenities at favorable prices. Nationally, the office vacancy rate stood at 16.8 percent in the second quarter, up slightly from 16.6 percent a year ago, according to real estate research firm Reis. Net absorption for the quarter totaled 3.2 million square feet, down from 3.9 million square feet a year ago. The average asking rent was $33.79 per square foot, up 2.2 percent on a year-over-year basis. Approximately 11.1 million square feet of office space was under construction at the end of the second quarter across Philadelphia, New York and Boston, according to CoStar Group. Helped by approximately 8.3 million square feet of absorption in the second quarter, the average vacancy rate across all three markets was 8.1 percent. Rather than undertake costly new ground-up construction projects, many developers are choosing to redevelop existing assets and efficiently incorporate office space into mixed-use projects. Coworking tenants occupied 54.2 million square feet of office space nationally at the …

December 4, 2019

Market Reports Massachusetts Northeast Northeast Market Reports Retail

Boston’s Retail Market Continues Move Toward Efficiency

by Taylor Williams November 20, 2019

With older, pure-play retail space being repurposed into mixed-use developments and e-commerce-resistant users growing their regional footprints, the Boston retail market is evolving in lockstep with that of the United States. At the same time, new, trendy retailers and restaurant concepts are vying to get their feet in Boston’s door, drawn to the market’s healthy fundamentals and above-average levels of disposable household incomes. The net result of all this activity is a revitalized retail landscape that is defined by rapid absorption and rent growth within quality existing spaces, the repurposing of older spaces into different uses and the rise of mixed-use developments as backdrops for new supply additions. According to World Population Review, Boston, a city spanning some 100 square miles, is the fourth-most densely populated metro area in the country. Fueled by a vibrant education scene that includes more than 20 colleges and universities, as well as the addition of 25,000 new jobs in 2019, the population is growing. These geographic and demographic fundamentals have all but ensured that demand for retail space in Boston is perpetually strong, even during economic downtimes. According Marcus & Millichap, the city proper’s retail vacancy rate currently sits at 3.3 percent, though it …

November 20, 2019

Market Reports Massachusetts Northeast Northeast Market Reports

Boston’s Exceptional Fundamentals Continue to Fuel Higher Land Values

by Taylor Williams November 13, 2019

With a large influx of some of the world’s best and brightest residents, Boston has evolved from a regional powerhouse into one of the world’s foremost innovative cities in less than 10 years. Boston is both the second-oldest and the third-densest major city in the United States, and since its founding 389 years ago, the city has experienced super-charged growth, urbanizing faster than almost all its peers. Because of that unprecedented growth, undeveloped parcels in desirable areas across the city are scarce, and developers are being forced to use creative ways to build through urban infill, reclamation and placemaking. Seaport: A New Hotbed The Seaport has become Boston’s designated area for office market growth. The Fallon Company, WS Development, Skanska, Tishman Speyer and Pembroke have all made their marks in this neighborhood by transforming surface parking lots into gleaming towers filled with office workers, residents and retailers. Companies like Alexion Pharmaceuticals, Foundations Medicine, Goodwin, PTC, PwC, Reebok, State Street and Vertex have responded by moving significant operations to this highly dynamic neighborhood. Not surprisingly, when Gillette decided to put 6.5 acres of excess waterfront land on the market, developers recognized the opportunity and responded accordingly. Related Beal purchased the site …

November 13, 2019

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