Continued life sciences demand gives the Suburban Office market a strong start to the year

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Short on time? Here are the highlights of our first quarter 2018 Suburban Office MarketView. To request the full report, fill out the form at the bottom of this post.

1 Patriots Park Rendering
1 Patriots Park Rendering 

To begin the year, the Greater Boston Suburban Office market recorded 169,634 sq. ft. of positive absorption, as considerable leasing activity in the Metro North and West bolstered the market. The Metro West continued to see significant interest from the life sciences sector, as tenants seek high-quality buildings with a cheaper alternative to comparable buildings in Boston and Cambridge. The Metro South experienced little activity, but large mixed-use redevelopment opportunities will be something to keep an eye on for the remainder of 2018. Overall, availability and vacancy decreased 40 basis points (bps) and 70 bps quarter-over-quarter, ending Q1 2018 at 21.1% and 18.2%, respectively.

 

Cambridge raises its own bar, as usual

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Short on time? Here are the highlights of our first quarter 2018 Cambridge Office & Lab MarketView. To request the full report, fill out the form at the bottom of this post.

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250 North Street, Cambridge Crossing

OFFICE MARKET
The Cambridge Office market maintained its unquestionable status as the premier office submarket in Greater Boston in Q1 2018. Vacancy fell to 3.8% market-wide, and availability finished at 11.9%. These types of numbers are to be expected, but average asking rents saw a major jump that put them on a new level—even by Cambridge standards. Due in large part to actively marketed new construction bringing an influx of premium space to the market, rents rose from $70.18 per sq. ft. in Q4 2017 to $80.52 per sq. ft. by the end of Q1 2018. In East Cambridge, they reached $93.17 per sq. ft. While landlords in other markets may not be able to command anything near these prices, Cambridge owners don’t have much cause for concern. The city’s tenant mix is increasingly dominated by deep-pocketed life sciences and tech giants who are more than up to the challenge.

Not all the storylines followed the usual path, though. The largest lease of the quarter was significant not only in its size, but because of its location. Philips leased a few blocks of space in rapid succession, totaling over 334,000 sq. ft.—but not in the heart of Kendall Square, as one might expect. Instead, this space was taken at 250 North Street, the first building to break ground at DivcoWest’s 4.5 million sq. ft. Cambridge Crossing development near Lechmere. Like many projects in the Boston area, the area formerly known as North Point had been a development pipe dream for many years. A lease of such magnitude from a blue-chip company is validation that this area’s promise is finally coming to fruition. When complete, Cambridge Crossing will feature 2.1 million sq. ft. of office and lab space, 2.4 million sq. ft. of residential, 100,000 sq. ft. of retail, and 11 acres of open space.

LAB MARKET
The story of the Cambridge Lab market in the first three months of 2018 should not come as a surprise. The market is as tight as ever, with no signs of changing. Demand remains in the stratosphere, with 2.4 million sq. ft. of active requirements, while only 161,000 sq. ft. are currently vacant. Largely bolstered by new projects under construction, 1.2 million sq. ft. is being marketed for future occupancy—still half the amount of demand. Tenants looking for space in the Cambridge Lab market run the gamut from household names seeking well over 100,000 sq. ft. to homegrown start-ups looking for less than 10,000 sq. ft. For companies large and small, the allure of this market remains unparalleled in the life sciences industry.

 

Boston rolls into 2018 as hot as ever

BostonDowntown_arrowsShort on time? Here are the highlights of our first quarter 2018 Downtown Boston Office MarketView. To request the full report, fill out the form at the bottom of this post.

The Downtown Boston Office market continued its stretch of significant growth in the first quarter. Demand came from local tenants, which continued to expand organically, as well as out-of-market companies that want to call Boston home. The market started 2018 on fire, posting 765,000 sq. ft. of positive absorption after ending 2017 with more than 1.2 million sq. ft. of growth. While this is an extremely impressive start to the year, it doesn’t fully capture the market’s activity, as more than 1 million sq. ft. has recently been committed by several large users looking to make major commitments in the city.

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140 Northern Avenue Rendering

Agility remains top-of-mind for companies more than ever, particularly when it comes to decisions affecting real estate. This is further evidenced by the growth of co-working companies, who continue to lease-up large availabilities throughout the city. In the first quarter alone, more than 250,000 sq. ft. was taken up by co-working firms, including household names and new entrants to the market. Just a few short years ago, space occupied by co-working operators made up less than 1% of the overall inventory. Today that number has grown to 2.5%, more than doubling.

 

 

 

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.