Recap: 2018 CBRE/New England Boston Market Overview

It was a great honor to have both Mayor Marty Walsh and Governor Charlie Baker speak at our 2018 Boston Market Overview.

This year, CBRE/New England representatives from our Downtown, Cambridge, Capital Markets, Suburban, Retail and Industrial teams all gave poignant market insights and takeaways for 2017 while looking forward to the year ahead. The group was moderated by Spencer Levy—Americas Head of Research for CBRE and a senior member of the company’s global research team—who opened the discussion on domestic and international trade, healthcare, taxes, industrial and retail agility, as well as the importance for businesses to follow talent.


Urban (Downtown & Cambridge) – Jon Freni, Senior Vice President/Partner; Carolyn Wheatley, Associate
Freni and Wheatley kicked off their 2018 IMG_2384-2market insights with the ever-present growing industry: co-working. Freni stated, “Tenant or landlord, this will be the big debate in 2018 and will continue to change the way we do business. Whether you like it or not, co-working is here in a big way. Embrace it and look for ways to compete with it.” Freni continued with two additional market insights that are increasing in popularity: ‘spec success’ and risk-reward deal structures.

Wheatley spoke of three market insights in Cambridge: the increasingly life-science-driven tenant base for both office and lab space, spec developments that meet the supply needs of the low vacancy market, and market risk-reward deal structures that are currently landlord-favored.

Capital MarketsDave Pergola, Executive Vice President/Partner
Given the complexity of investing in New England commercial real estate, Pergola broke the investment market into three categories.


“In closing, CBRE/NE believes that if you have some conviction and the right type of capital to invest, the best opportunities in 2018 will be large, high-quality suburban office buildings.”


Suburban OfficeAlison Powers, First Vice President
Powers started off her talk by debunking a common 2017 theme. “[…] despite the headlines signaling otherwise, the market was actually quite active in 2017 fueled by an incredible amount of leasing velocity driven by organic growth (I promise you not every suburban tenant moved to the Seaport) as well as continued momentum from the life sciences sector.”


A select number of suburban landlords thrived because their space was large, scalable, high-quality and/or new real estate, with amenities and an accessible location.

RetailMatt Curtin, Senior Vice President/Partner
Next up was Matt Curtin who spoke about how changing consumer behaviors are forcing both retailers and landlords to step it up. He mentioned L.L.Bean and lululemon as two examples of traditional retailers who have integrated experience into their lifestyle brands. L.L.Bean will offer kayak and paddle board at its new Seaport Square location and lululemon offers fitness classes inside and outside of their stores. Matt also highlighted how entertainment concepts, craft beer, fast-casual restaurants, mobile app ordering and “clicks to bricks” retail trended in 2017 and is expected to blossom in 2018.


IndustrialRachel Marks, Vice President
Rachel Marks closed out the market talks by focusing on the importance of industrial warehouses in Greater Boston as consumer expectations of convenience continue to grow, and people are comfortable buying more online. The changing habits of consumers force omni-channel distributors to deliver product quickly and inexpensively, which means they now need to occupy space close to large population centers like Boston. Other demand drivers in the industrial market include breweries, marijuana cultivators, biopharma manufacturing, technology and medical devices. With all this demand, there is currently a major shortage of quality industrial supply in New England.

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Visit the CBRE/New England Vimeo page for videos from the event. Stay tuned for our next post, where we will reveal what our Hartford experts covered at this year’s CBRE/NE Hartford Market Overview.

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By Mark Clayton, Executive Managing Director of Development & Project Management

  • This past year, a noticeable rise was seen in construction costs. For both labor and material costs, there was an increase of approximately 3.5-5% in the Boston market.


  • The Boston market’s average construction costs are higher than the rest of the country, ranging from $110-125 per sq. ft. This compares to a national average of about $100 per sq. ft.
  • Due to the higher-than-normal volume of work in the Boston market, when choosing a consultant, it is important to evaluate their existing workload to ensure they have the capacity to meet expectations.
  • Most new space designs are moving away from traditional office concepts and in the direction of a more open and collaborative environment.
  • Furniture and AV components have become a critical part of the open environment concept, adding to overall first-time costs.


  • Workplace strategy has become a buzzword in the industry. Understanding how and where people work is critical in the initial design process, and providing flexibility for employees has become a competitive differentiator.
  • Due to the volume of work in the City of Boston, the overall permitting process timeline has been extended, which should be taken into consideration when reviewing a complete construction schedule.

Interested in reading more of our spotlights? Look no further. Read more in our 2017 Market Outlook.


Recap: 2017 CBRE/New England Boston Market Overview – Part 3

Next up in our Boston Market Overview recap series, our attention turns to representatives from our Capital Markets team. Brian Doherty, Senior Vice President/Partner, and Biria St. John, Vice Chairman/Partner, reflected on 2016 and selected their draft picks for 2017.

This past year, Boston made the list for “Best Metros for Investment 2016,” breaking into the Top 10 after previously being ranked out of the Top 15.


* denotes metro previously not listed in the Top 15; CBRE Research, Global Investor Intentions Survey 2016

Draft Pick #1: Brian’s 2016 MVP = Urban Core & Value-Add Office


“Boston had the home field advantage in 2016; some huge wins for a lot of Boston-based sponsors included Paradigm at 101 Tremont and Synergy at 101 Summer. These groups had great game plans, flawless execution, plus institutional exits.” – BD

Draft Pick #2: Biria’s Multifamily 2016 MVP = Value-Add Suburban & Urban Infill


“The appeal for value-add space can be distilled down into a few key factors: fundamentals are still solid (outstanding employment market and inward migration) plus basis play that offers stability, durability, but upside with the opportunity to enhance the returns through upgrades.” – BSJ

Draft Pick #3: Biria’s Multifamily 2017 Player to Watch = Suburban Class B/C & Urban Infill


“Millennials want an authentic neighborhood and like local flavor, not the sterile environment that is anchored by national chains and looking to catch a break on the $4.00-5.00/SF rents in downtown Boston.” – BSJ


Draft Pick #4: Brian’s Commercial 2017 Player to Watch = Industrial of All Shapes & Sizes


“Looking back on 2016 and the deals we worked on, industrial product flew off the shelf. There were deep bidder pools, strong institutional interest and buyer support with multiple rounds of offers.” – BD


Draft Pick #5: Brian’s Commercial Flex Pick = Fringe Core Opportunity Plays


“Today, the market is a bit in flux with a Goldilocks Phenomenon occurring. The urban core appears to be getting more expensive by the day and the suburbs feel a bit too risky right now.” – BD


Draft Pick #6: Biria’s Multifamily Flex Pick = Unique Class A Core Assets


“Because of a shift in capital towards value-add and core-plus opportunities, there is the opportunity to pick up some high-quality core assets at slightly higher yields than a year ago.” – BSJ



Stay tuned for our next post, where we will reveal what our Rhode Island experts covered at this year’s CBRE/NE Rhode Island Market Overview.

Did you miss the beginning of our BMO recap series? Click on the following link for Parts 1 and 2.

Recap: 2017 CBRE/New England Boston Market Overview – Part 2

In this next installment of our Boston Market Overview recap series, we look to our Suburban market experts. Alison Powers, First Vice President, and Andy Majewksi, Executive Vice President/Partner, have been following suburban migration for some time now. But why is this happening? What are the numbers behind these trends? Their draft picks tell all…


Draft Pick #1: Alison’s 2016 MVP = Life Sciences


“In 2016, over 1.3 million square feet was leased to the life sciences sector in the suburbs outside of Boston and Cambridge. That’s a 35% increase in life sciences leasing activity from 2015 resulting in one million square feet of positive absorption in the suburbs.” – APCBRE_2017MARKETOVERVIEW_2-65.jpg

Draft Pick #2: Andy’s 2016 MVP = Industrial

“Despite negative absorption on the office front, the industrial market experienced over 550,000 SF of positive absorption, which marks a 10-year high for the Greater Boston Industrial market. This is why my MVP pick is industrial. Where else on Route 128 can you find a vacancy rate of 6% and 18% rent growth? So what’s causing this upswing? It’s really a function of industrial migration in and migration out.” – AM


CBRE_2017MARKETOVERVIEW_2-74.jpgDraft Pick #3: Andy’s 2017 Player to Watch = New Construction

“What do Beverly, Waltham, Watertown, Lexington and Newton have in common? New construction and, in some cases, major renovation—there are currently 10 projects across these five times in the works, demonstrating that there are no boundaries to new construction in the suburbs. ” – AM


Draft Pick #4: Alison’s 2017 Player to Watch = Organic Growth

“There is continued migration outward from Cambridge and Boston of life sciences and even non-life sciences companies that need to accommodate expansion.” – AP

Draft Pick #5: Andy’s Flex Pick = Millennials Aging

“In 2017 the largest cohort of millennials will turn 26. That’s important because it’s the same age that young people start to get more serious about their careers, housing and their future.” – AM


Draft Pick #6: Alison’s Flex Pick = Generation Z

“Generation Z is 25% of the current population. The oldest members of Generation Z are turning 21 years old next year and will be entering the workforce before you know it. Generation Z is comprised of 60 million people strong—outnumbering millennials by nearly one million—and they are going to boost the suburbs.” – AP


Stay tuned for our next post, where we will reveal the draft picks chosen by our Capital Markets team at this year’s Boston Market Overview.

Did you miss our first installment of the BMO recap series? Catch up here.

Recap: 2017 CBRE/New England Boston Market Overview – Part 1

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It was a great honor to have both Mayor Marty Walsh and Draft Kings CEO Jason Robins speak at our 2017 Boston Market Overview earlier this month. Keeping with the DraftKings fantasy sports theme, this year CBRE/New England representatives from Urban and Suburban leasing as well as our Capital Markets group reflected on last year’s MVPs and then selected their draft picks (predictions) for the upcoming year.

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Mayor Marty Walsh, Jason Robins, John Butterworth & Andy Hoar

And so it began… with the kick-off from the 35-yard line, Andy Hoar, CBRE/NE President/Co-Managing Partner, set the pace for the morning’s program. John Butterworth, Executive Vice President/Partner of Urban Brokerage, introduced Mayor Marty Walsh, who has gone the distance up and down the field many a times, returning kick-offs from a variety of developers with hopes to score a touchdown in Boston.



Making moves past the first-down marker, Spencer Levy, Head of Americas Research for CBRE, carried the ball a bit further down field and opened the discussion on domestic and international trade, immigration, taxes, the power of voice, regulation, infrastructure and management style.

On draft day, every team has an opportunity to reflect and rebuild for the next season. Our CBRE/NE speakers did exactly that by presenting their 2016 highlights, in addition to their new year predictions. The game plan was presented and the players were ready to take the field.

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Urban (Downtown & Cambridge) – Meredith Christensen, Vice President; Adam Brinch, Senior Vice President/Partner

Draft Pick #1: Out-of-Market Tech Demand

“Much like Tom Brady is the New England Patriots’ obvious pick for the 2016 MVP, out-of-market tech-driven demand is my obvious pick for the 2016 MVP.” – MC

Draft Pick #2: Cambridge 2016 MVP = Organic Growth

“While Downtown’s headlining deals came largely from out of market, in 2016 the Cambridge market’s MVP was…ORGANIC GROWTH! From Facebook to Amazon, Akamai to Hubspot, and Takeda to Shire, you’ve got some serious firepower reiterating the case for the connection to MIT and Harvard. The combined market cap for these 10 companies that executed expansion deals during 2016 is $1.8 trillion.” – AB

Draft Pick #3: Cambridge 2017 Player to Watch = New Development


“The current development cycle has delivered 16 new projects totaling 4.2 MSF in Cambridge. That represents a supply growth of 22% over the past nine years.” – AB

Draft Pick #4: Downtown 2017 Player to Watch = VIBE Drives Velocity

 “Vibrant neighborhood, Innovative design, Bold amenities and an Entrepreneurial ecosystem. Simply,VIBE drives velocity.” – MC

Draft Pick #5: Urban Flex Pick = The Redefinition of Lab

“With Cambridge lab demand currently floating around 2 MSF of active requirements, demand is outpacing available supply by more than two and half to one.” – AB

Stay tuned for our next post, where we will reveal the draft picks from our Suburban and Capital Markets teams, along with Jason Robins’ keynote highlights. Here’s a quick snapshot of what to look forward to in this special CBRE/NE mini-series: