Despite large givebacks, demand remains steady in the suburban office market

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

BostonSuburbanImageQ3The Suburban Office market experienced a slow Q3 2017, recording 685,640 sq. ft. of negative absorption. A number of large blocks of space were returned throughout the market, primarily driven by relocations and added sublease space in the Route 128 West submarket. Fundamentals remain healthy despite these new vacancies, as demand remains steady and there are several large active requirements throughout the market.

Overall, availability and vacancy increased 30 basis points (bps) and 20 bps quarter-over-quarter to 21.3% and 19.0%, respectively, a direct result of the considerable added inventory.

 

Urban industrial heating up as speed-to-ship demand rises

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

The Greater Boston Industrial market BostonIndustrialQ3sustained its momentum into the third quarter, recording almost 530,000 sq. ft. of absorption in Q3 2017 and over 1.6 million sq. ft. year-to-date. The outlook remains positive as strong rents, accompanied by declining availability and vacancy, continued through the third quarter.

Demand for industrial space closer to the city continued to increase, while some obsolete industrial product in the suburbs is under consideration for redevelopment. With urban rents increasing, companies have been looking to land close to the city along the Route 128 belt; however, due to tight space, some are being pushed out to the quieter Route 495 market.

Office remains steady while lab charges ahead

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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.

LAB MARKET
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.

 

Boston goes from warm to hot in Q3

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Short on time? Here are the highlights of our third quarter Downtown Boston Office MarketView. To request the full report, fill out the form at the bottom of this post.BostonDowntownQ3

Activity continued to ramp up in the third quarter in the Downtown Boston Office market, which culminated in over half a million sq. ft. of positive absorption. All three of the core downtown submarkets contributed to this strong showing, and the trend continued into the smaller markets as well.

A good percentage of the absorption outcome was due to two headline-making moves: technology company PTC is relocating its headquarters from Needham and Alexion Pharmaceuticals relocating its headquarters from Connecticut, both landing at 121 Seaport Square, a 17-story tower that is currently under construction in the Seaport district. Construction began on the building without any major tenants lined up, but with these deals it is now 100% preleased. PTC’s 250,000 sq. ft. lease is the largest in Boston this year, and the firm will bring over 1,000 employees to the Seaport.

PTC and Alexion Pharmaceuticals are the latest in a string of prominent companies to relocate to Boston from the suburbs, with many of these tenants choosing the Seaport as their new home.

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.