by Lyndsey Shepard, Research Analyst
Yesterday morning real estate professionals gathered for NAIOP’s Markets Under Pressure: A Tug of War Between Boston & The Burbs. More than 300 commercial real estate professional from all over Greater Boston were in attendance to participate and listen to a panel of four top leaders, including CBRE/New England’s own Andy Majewski, Executive Vice President/Partner on the Suburban Brokerage team.
Panelists debated topics that covered a variety of aspects affecting the Suburban and Downtown Boston markets. Central to the debate was the discussion of the driving factors that influence where companies choose to locate their businesses and the symbiotic relationship between Boston and the suburbs. The “eco-systems” in the suburbs are looking and feeling similar to downtown.
Without question, all panelists agreed that company culture and accessibility to top talent are dominating the decision-making process. Rental rates and overall costs are also a factor, especially for lower-margin businesses.
Occupiers are placing more and more value on locations that offer the live-work-play atmosphere. Historically, this could only be found in urban settings, but as Majewski explained, that has changed as suburban landlords are forced to meet tenants’ changing preferences in the workplace. Markets outside of downtown Boston like Waltham and Marlborough, Majewski explained, have reinvented their office parks to fit the live-work-play lifestyle that tenants are demanding.
Bryan Koop of Boston Properties highlighted another trend, the “middle-market war,” with serious implications for tenants and landlords alike. The rightsizing trend has moved outward from the city and expanded to the suburbs. Companies are no longer seeking large blocks of space with ample room for growth. Rather, they are focusing on space that meets their immediate needs and locking in options to expand their footprints in the near future. The result is less demand for large blocks of space and heightened demand for space in the 40,000–60,000 square foot range. As more companies have jumped on this “rightsizing” trend, a war for the “mid-sized” space that meets their current needs has emerged.
With no shortage of activity in the Downtown and Suburban markets, the question is left regarding what future trends and migration patterns will take place for companies in the Greater Boston markets.