Operations will remain tight in the urban core as retailers expand to premier locations in Boston, while stagnant building activity and an uptick in demand will allow operators to backfill under-utilized space in the suburbs. As businesses expand payrolls in the Financial District, residents will migrate toward major employment hubs and entertainment districts in surrounding areas. As a result, global and national retailers will expand or relocate from older centers in peripheral neighborhoods to newer, redeveloped infill properties in Boston. Prime shopping districts in Back Bay, including Newbury Street, Commonwealth Avenue, and Boylston Street will garner the most consideration this year as tenants lease quality, street-level store fronts with high visibility. As available space shrinks in the submarket, vacancy will drop to a metrowide best of 3.4 percent this year, giving owners enough leverage to raise rents. Meanwhile, muted construction and large lease signings will support positive net absorption in third-ring suburbs such as Bristol County and Merrimac Valley submarkets, reducing vacancy an average of 100 basis points this year. Solid retail sales and job growth encouraged tenants to move forward with expansions, underpinning a 60-basis-point decrease in vacancy over the past year to 6.5 percent. In the prior 12 …
Northeast Market Reports
New Hampshire has a big story to tell: a lower than average unemployment rate, low poverty and crime rate, high median household income and a well-educated population. We are among the healthiest and safest states in which to live. All of these factors contribute to continued population growth which will drive the goods and services sectors. New Hampshire also benefits from its proximity to Massachusetts and Maine as well as Canada whose shoppers are eager to take advantage of the absence of a sales tax. Prior to 2009, the Northern New England retail market was vibrant and active. However, retail expansion in the market came to a halt in 2009 and 2010 while the economy tried to dig itself out of stagnation. This year has seen a moderate uptick in activity both from a local and national perspective. Demand for retail space in northern New England is slowly returning. For the past several months, national retailers have been focusing on major metropolitan markets rather than peripheral markets. If retailers have a limited open to buy, chances are smaller cities such as Portsmouth may not be on their initial target list for expansion. However, quality retail space is continually being absorbed. …
The commercial real estate market in Fairfield County reflects the issues affecting the greater national economy. Due to the fundamentals of commercial real estate and how the marketplace functions, the region will be in a state of malaise for the foreseeable future. The marketplace has bottomed, however, and will improve over time. From 2005 through mid 2008, employment was increasing, companies were expanding; there was competition to put money to work through loans and investments. Capital formation grew at a torrid pace as the national capitalistic system sought higher and higher returns in a market where the risk seemed to diminish each month. As that feel-good locomotive hit the wall in 2008, there were tremendous lay-offs and all capital sources that had been pushing money at the real estate asset class evaporated. In the first three quarters of 2009, tenants stopped conducting real estate business almost altogether. Even tenants driven by lease expirations often opted for short-term renewals due to the cataclysmic uncertainties that decision makers were facing. Additionally, tenant renewals were driven by give-backs of space as companies needed less space due to fewer employees. Companies took space proactively in 2007 because they anticipated hiring more employees, but they …
Demand for industrial space remains moderate in Northern and Central New Jersey. People are, undoubtedly, out in the marketplace, but much of our regional activity ties to lease renewals. Tenants facing term expirations are opting to remain in place, reflecting the “wait and see” approach that so many companies have chosen in this tough economic climate. Relocations almost always involve a flight to quality, with tenants taking advantage of opportunities to land attractive deals for Class A space. Deals today are being made at aggressive rental rates. As a result, available Class A space, especially in the Exit 8A submarket, has seen some absorption over the past 12 months. Across all submarkets in Northern and Central New Jersey, renewal activity comprises the bulk of leasing activity. Although year-to-date leasing totals are up from a year ago by approximately 1.2 million square feet, vacancies have held steady during the past 12 months. At the end of 2010’s third quarter, the overall Northern and Central New Jersey vacancy rate rested at 11.3 percent. That figure is identical to the rate recorded at this time last year. The average direct triple-net rental rate for Northern and Central New Jersey was $5.84 per square …
With a strong economic foundation based upon the education, healthcare and pharmaceutical industries, the greater Philadelphia market has long been revered as one of the most stable markets in the United Statesthat isunaffected by the manic swings often experienced by other major markets. Even at the height of the recession, savvy retailers remained relatively active in top-tier, well-positioned segments of the market. In fact, several used the recession to position themselves more strategically and affordably in tough-to-penetrate areas, minus the frenzied competition they faced before the downturn. The black eye created by the closures of Circuit City and Linens ‘N Things, two of the most high-profile retail bankruptcies of the recession, has seemingly healed faster here than elsewhere,as many of the junior anchor spaces they vacated are getting absorbed by several electronics retailers. hhgregg, which had 12 simultaneous openings in the region on May 20, 6th Avenue Electronics and P.C. Richard & Sons are the most conspicuous of said retailers. hhgregg is making its first retail foray into the Northeast while the more regionally oriented 6th Avenue Electronics and P.C. Richard & Sons found themselves conveniently based in the New York metropolitan area and able to take advantage of these …
Recent news: Several large transactions have taken place recently: pet supply retailer PetEdge signed a new 215,000-square-foot lease in Billerica, Dealer Tire took approximately 100,000 square feet in Mansfield, and Harvey Industries signed a new lease for 55,000 square feet in Southborough. A number of new prospects are also looking to capitalize on aggressive rental rates. These include Sonepar, in the market for 180,000 square feet; Horizon Beverage, in the market for 400,000 square feet; and New England Sheets and Horn Packaging, each in the market for 150,000 square feet. Major industrial users leaving the market include General Motors which will vacate 400,000 square feet in Norton and Adidas/Reebok which will vacate an additional 500,000 square feet in Lancaster and Stoughton. Submarket update: Overall, the Metro South industrial market has been hit the hardest, recording its worst metrics in 10 years and posting a 22 percent availability rate at the close of 2009. The strong-performing Metro West Market, which saw nominal adjustments in vacancy rates, absorption and average asking rents, managed to capture several large transactions in 2009, including Genzyme, Verizon and FedEx Smart Post. The Metro North Market posted lower vacancy and lower tenant velocity. Predictions for the next …
Recent news: The leasing activity in Connecticut has been very healthy in recent months as evidence by the new leases signed in the marketplace. Some junior anchor box examples include a 24,000-square-foot REI deal in Norwalk; a 37,000-square-foot Stop & Shop Supermarket in West Hartford; a 30,000-square-foot PC Richards deal in Milford; and numerous other deals. Also, the recent sale of the Shaw’s Supermarket sites to existing supermarket chains demonstrate that retailers feel that Connecticut is still a very healthy market. Another trend, which has been very apparent in Connecticut, has been the surge in franchise concepts leasing smaller spaces within supermarket anchored shopping centers and community centers. Some franchises that are active include Massage Envy, Sport Clips, Robeks, Five Guys, Doctors Express and numerous others. Submarket update: The luxury-oriented streets (Greenwich Avenue in Greenwich and Main Street in Westport) had a weak 2009. However, the outlook for 2010 is much more promising with recent signature stores openings, including Apple and Ralph Lauren. Leasing activity has increased dramatically and leasing inquiries are at its highest levels since the summer of 2008. Predictions for the next year: The “Year of Fear” (2009) is over, thankfully, and the “Year of Caution” (2010) …
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 …
While many cities in the Boston area rely on their proximity to the city to ensure economic development, outlying towns have proven equally resilient. Despite the current economic downturn, Westfield, Massachusetts, continues to secure new business due to a combination of financial incentives and its desirable location. The city has utilized these local and statewide incentives to encourage investment, including the Economic Development Incentive Program, a tax incentive program designed to stimulate business and create jobs in Massachusetts. This month, construction began on an estimated $25 million, 657,000-square-foot rapid deployment distribution center for The Home Depot. A tax incentive helped finalize plans for the new center. Westfield’s City Council and Mayor Michael R. Boulanger devised an incentive for the company that calls for a 50 percent cut in property taxes for the first 10 years of operation. The new distribution center is expected to create as many as 150 jobs. The city has also shown a willingness to go beyond tax incentives to attract business. In March, Target Corporation purchased land for the construction of a 1 million-square-foot distribution center at an estimated cost of $100 million. Before the purchase was complete, the city council passed a $10 million bond …
Although many believe that the economy is starting to pick up, the “wait and see attitude” of many investors and companies still persists in the commercial real estate marketplace. Many are simply waiting for things to get better or waiting to see if, instead, things get much worse. Frank Gunsberg of First Service Williams says, “The economy is showing signs of picking up, although there have been fits and starts. I'm hopeful that we'll see a rebound by the end of the year and into 2010.” The seemingly perpetual wait and see attitude is having its way with the New Jersey office market as well. Gunsberg notes that many office tenants are asking for short-term lease renewals and extensions. Whereas, under typical market conditions office leases ranged from 5 to 10 years, tenants are asking for 1 or 2 years. “They just are not sure what is going to be happening with the economy,” he explains. “People are reluctant to do things even though this is probably one of the best times to jump. Landlords are willing to make concessions they would not normally make. If you have a good balance sheet, you are an extremely desirable tenant.” Although landlords …