Another solid quarter for the industrial market as its reputation grows

 

snapshot_Industrial.pngShort on time? Here are the highlights of our first quarter Greater Boston Industrial MarketView. To request the full report, fill out the form at the bottom of this post.

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After ending 2016 with record-breaking absorption of over 3.4 million sq. ft., the Greater Boston Industrial market set its bar high. While it would have been difficult to replicate that sort of showing two quarters in a row, Q1 2017 was still a solid three months, with positive absorption in all three markets for a cumulative 440,000 sq. ft.

Vacancy remained low, with single-digit numbers across the board, and asking rents stayed elevated year-over-year.

Two distinct themes shaped and bolstered the market in the first quarter, the first being organic growth by local companies, and the other new entrants to the Greater Boston market—indicative of the area’s increasing visibility and appeal on the national stage.

The West carries the market as the suburbs get off to an uneven start

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

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Reebok’s headquarters relocation to downtown Boston in Q3 2017 will result in another large block of space becoming available in the Metro South market.

To begin the year, the Greater Boston Suburban Office market recorded 320,388 sq. ft. of positive absorption, as considerable activity in the Metro West bolstered the market, much of which was holdover from slow-moving deals in 2016.

Life sciences continued to drive demand, and as tenants began to shift outwards from tighter urban markets, buildings with strong amenities experienced the most success, as the push for quality office space continued to rise.

Availability dropped 20 basis points (bps) quarter-over-quarter to 20.5% as large tenant renewals and organic growth from established companies continued to be a theme.

Despite the decline in availability, vacancy increased 50 bps, quarter-over-quarter, to 18.1%, while rents remained relatively flat, ending Q1 2017 at $22.78 per sq. ft.

 

Cambridge turns in another solid quarter… for now

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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.

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OFFICE MARKET

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%.

LAB MARKET

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. 

 

CBRE/NE Cliffnotes: 3Q16 Downtown Boston Office Market

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Short on time? Here are the highlights of our third quarter Downtown Boston marketview. To request the full report, fill out the form at the bottom of this post.

The Downtown Boston Office market sustained consistent activity through the summer, with overall market conditions continuing to put Boston in the top-performing markets across the country.

Overall Class B rents continue to reach historical highs, ending the quarter at $45.51 per sq. ft, as companies are using real estate to impact culture change more than ever.

The modernized amenity offerings that have been created in Class A buildings in order to compete with creative Class B space have now become the norm. Will we start to see Class B assets creating similar amenities to maintain competitiveness?

In the CBD, traditional professional services firms continue to shrink office footprints to increase efficiency. Availability increased by 10 basis points (bps) while vacancy increased by 30 bps, ending Q3 2016 at 7.7%.

Boston Properties delivered 888 Boylston Street, the newest high-rise building to the Back Bay submarket since 2001. Setting a new benchmark in sustainable buildings, the project was 77% pre-leased upon delivery.

The Seaport continues to attract out-of-market companies. Red Hat announced a 40,000 sq. ft. urban office at 300 A Street. America’s Test Kitchen leased 52,000 sq. ft. at the IDB at 21-25 Drydock Avenue.

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To request the full report, please submit this form:

3Q14 MarketView Reports Released

by Suzanne Duca, Director of Research

Boston Office (click to download):
The Downtown Boston Office market continued to tighten during the third quarter, experiencing 847,000 sq. ft. of positive absorption. This brings downtown Boston’s 2014 year-to-date absorption to over 1,500,000 sq. ft. Boston’s central market especially benefited from the tightening East Cambridge market, with two tenants over 100,000 sq. ft. announcing plans to move across the river.

Cambridge Office/Lab (click to download): 
The Cambridge Office market continues to be one of the tightest submarkets in the country, despite what the overall 3Q 2014 statistics might say. With several large givebacks of space from tenants relocating to downtown Boston, the 388,000 sq. ft. of negative absorption recorded this quarter will serve as a needed relief valve to the office market. The Cambridge Lab market saw its third consecutive quarter of positive absorption, posting 49,000 sq. ft. of positive growth driven by a handful of newly public biotech companies.

Suburban Boston Office (click to download):  
The Suburban Boston Office market was driven by robust demand and organic growth from small, mid and large users in Q3 2014, posting almost 550,000 sq. ft. of positive absorption. New leases outpaced renewal activity with six tenants finalizing deals totaling more than 100,000 sq. ft. each in Q3 2014. As a result, vacancy decreased by 30 basis points quarter-over-quarter to 17.0%.

Suburban Boston Industrial (click to download):  
The Greater Boston Industrial market saw 751,000 sq. ft. of positive absorption in 3Q 2014. This pushed vacancy down 90 basis points quarter-over-quarter to 14.6%, its lowest point since the fourth quarter of 2007. The first new industrial construction in years is underway as The Maggiore Companies is building a 200,000 sq. ft. warehouse at Myles Standish Industrial Park in Taunton.

To subscribe to the CBRE/New England blog, please visit the main page or email a request to blog@cbre-ne.com.

As Promised, 3Q14 Hartford Stats

by Suzanne Duca, Director of Research

The third quarter 2014 statistics for the Hartford market have been published by the CBRE/NE Creative+Analytics team. Click the links below to download quick reference guides.

Click here for 3Q14 Hartford Office Statistics

Click here for 3Q14 Hartford Industrial Statistics

Be on the lookout for our MarketView reports later this month!

To subscribe to the CBRE/New England blog, please visit the main page or email a request to blog@cbre-ne.com.

#WednesdayWisdom: 2Q14 MarketView Reports Released

by Suzanne Duca, Director of Research

Boston Office (click to download) 
Despite a record number of big deals in 2013, the Downtown Office market was able to eclipse last year’s absorption pace and finish the first half of 2014 with over 740,000 sq. ft. of positive absorption. Creative tenants fueled office demand in the CBD, which posted almost 550,000 sq. ft. of positive absorption. Class A availability in the CBD dropped to 18%, a decline of almost 200 basis points since year-end 2013. Class B availability has reached the lowest point since 2001, now sitting at 10.6%.

Cambridge Office/Lab (click to download)
The Cambridge Office market was robust this quarter and, with fundamentals strengthening, large tech titans began to make their presence felt throughout East Cambridge. Start-up and new-economy tenant activity also flourished during 2Q14, with a number of early-stage companies planting a flag or expanding. The lab market continued its positive momentum in 2Q14 and experienced 160,000 sq. ft. of positive absorption for the quarter.

Suburban Boston Office (click to download)
Strong demand from both organic growth and out-of-market tenants helped offset several large givebacks leading the Suburban Office market to a relatively flat second quarter, posting 73,000 sq. ft. of positive absorption. The Gutierrez Company broke ground on a new 100,000 sq. ft., speculative office building at 4 Burlington Woods.

Suburban Boston Industrial (click to download)
The Greater Boston Industrial market continues to tighten, posting 374,000 sq. ft. of positive absorption in 2Q14 with availability declining 40 basis points quarter-over-quarter. As the overall market continues to tighten, average asking rents continue to rise, ending at $6.83 NNN per sq. ft. in 2Q14 and reaching the highest point since the beginning of 2009.

 

To subscribe to the CBRE/New England blog, please visit the main page or email a request to blog@cbre-ne.com.