Office remains steady while lab charges ahead


Short on time? Here are the highlights of our third quarter Cambridge Office & Lab MarketView. To request the full report, fill out the form at the bottom of this post.

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The Cambridge Office market posted its best three months of the year in the third quarter. Absorption was a respectable 59,000 sq. ft. and asking rents continued to rise, reaching $68.35 per sq. ft. Premium spaces saw interest; however, there is not much premium space on the market, and lower-quality options received a tepid reception. This caused availability and vacancy to increase over the last year. Expansions by existing tenants were the primary driver of demand, and two of the three largest office leases this quarter were deals of that type.

Demand for lab space in Cambridge is as strong as it’s ever been. The market saw positive absorption of over 684,000 sq. ft., the highest since the first quarter of 2012. It’s a welcome return to form after a few lackluster quarters, and brings year-to-date absorption up to 568,000 sq. ft. With such a large amount of absorption, availability and vacancy dropped from 11.7% and 4.5% last quarter to 6.6% and 2.0%, respectively. The spaces that came off the market were mostly premium offerings, leaving a small number of less desirable and less expensive options available, causing average asking rents to fall.


Cambridge turns in another solid quarter… for now


Short on time? Here are the highlights of our first quarter Cambridge Office/Lab MarketView. To request the full report, fill out the form at the bottom of this post.



With the question of the day being whether the market has reached its peak, many have pointed to the fact that Boston rents are still well below their 2008 peak as evidence that there is still room to run. But does Boston proper alone still present the full picture of the market, or has the epicenter of demand shifted to the other side of the Charles?

The rental spike in Boston that preceded the 2008 collapse saw growth of 89.9% from trough to peak. By comparison, East Cambridge office rents have grown 110.1% since 2011. Whether Cambridge is the new bellwether of the Boston market remains to be seen, but signs of caution have already been sighted in the city.

This is not to say the Cambridge Office market is struggling by any definition. Indeed, the first quarter statistics remained robust across the board. Asking rents—already the highest in Greater Boston— continued to see very slight upward growth, absorption was in the black and vacancy was only 3.6%.


In the last few years, finding lab space in Cambridge has been challenging even for those that could afford it. In response, developers and investors have been rapidly putting steel in the air, and more have plans underway to do the same.

At North Point, DivcoWest’s new megaproject near Lechmere, 430,000 sq. ft. of lab space is on the table, while other buildings spearheaded by MIT and Alexandria are already underway to service the pent-up lab demand.

But much like the office side, Cambridge lab demand has been waning of late, leading some to wonder whether these new projects will come online too late in the cycle and only exacerbate a softening market. 


Lowest Vacancy, Highest Ranked: Cambridge Leads the Nation

netherwood-schwesig_evianne_e2By Évianne A. Netherwood-Schwesig, Senior Research Analyst | Creative & Analytics

For anyone familiar with the world of commercial real estate in Boston, it’s well known that Cambridge has been the hottest office market in the last few years. Demand for space, particularly around Kendall Square, has driven rents into the stratosphere and left only small scraps of availability in its wake.

Dramatic descriptions? Maybe not. According to new national rankings by CBRE Research, Cambridge’s metrics aren’t just impressive at a local level. The city boasts the lowest office vacancy rate nationwide, at just 3.8%. This is head and shoulders above runner-up Nashville, which landed at 4.7%. At $65.26 per sq. ft., asking rents in Cambridge were the fifth highest in the country, bested only by a pair each of New York and San Francisco markets. It’s worth mentioning that Boston proper also did itself proud: among all urban markets, its 7.3% vacancy rate and $55.71 per sq. ft. asking rent put it in seventh and eighth place, respectively.


Lowest Office Vacancy Rates:

Rank All Markets Rate (%)
1. Cambridge 3.8
2. Nashville (Suburban) 4.7
3. Oakland (Downtown) 5.1
4. San Francisco, (Downtown) 6.3
5. Manhattan, Midtown South 6.5
6. San Jose (Suburban) 7.2
7. Boston (Downtown) 7.3
8. Walnut Creek/I-680 Corridor 7.8
9. Manhattan, Midtown 7.9
10. San Francisco, (Suburban) 7.9

Source: CBRE Research, Q4 2016

Highest Office Asking Rents:

Rank All Markets Rent
1. Manhattan, Midtown $83.54
2. San Francisco, CBD $72.77
3. Manhattan, Midtown South $71.37
4. San Francisco, (Suburban) $68.28
5. Cambridge $65.26
6. Manhattan, Downtown $59.16
7. San Jose (Suburban) $58.34
8. Boston (Downtown) $55.71
9. Washington, D.C. (Downtown) $53.61
10. Oakland (Downtown) $52.56

Source: CBRE Research, Q4 2016

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: