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.

 

CBRE/New England Research Highlighted at State House Day

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On Thursday, April 12, our Évianne Netherwood-Schwesig’s research on the 495/Metro West market was displayed at 495/MetroWest Partnership’s annual State House Day. The 495/Metro West market extends along the Interstate 495 corridor from Westford in the north to Foxborough in the south, and spreads east-west along Route 9 from Natick to Shrewsbury. While once primarily an industrial economy, the area today supports a broad spectrum of white-collar occupiers, including a growing cohort of tech and life science companies.
Map of 495 metroWest
A high-level overview of Évianne’s findings is below:

  • Although 2018 began in the red, absorption was positive in three of the four preceding quarters. Continued healthy tenant demand indicates that the market is on solid footing.

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  • Vacancy has declined steadily over the last three quarters, as increasing numbers of tenants look for affordable alternatives outside the Boston urban core.

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  • 495/Metro West rents have seen modest growth in recent years, as is to be expected as the market gains attention. However, rents remain at a dramatically better value than in the Boston urban core, where rapid growth has driven the rental gap even wider.

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  • Specific 495/Metro West company statistics can be found below:

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To read more about Évianne’s findings, click here.

CBRE/New England Wins Big at the CBA Achievement Awards!

By Taidgh McClory, Managing Director/Partner, Advisory & Transaction Services

On March 22 at the InterContinental in Boston, the Commercial Brokers Association (CBA) gathered to honor select brokerage teams throughout Greater Boston at their annual awards dinner. For the brokerage industry, this is equivalent to the Academy Awards. CBRE/New England stood out as a dominant force at the awards, taking home six out of a potential 13 awards.

On behalf of the entire company, congratulations to all this year’s winners, nominees, our clients and the finalists! We continue to be proud of our employees, our collaboration and our market leadership as a world-class company.

Below are the CBRE/NE finalists for 2017’s CBA Achievement Awards:

MemorialDrive_1Office Deal of the Year – Greater Cambridge
InterSystems
Size: 238,000 SF
Address: One Memorial Drive, Cambridge, MA
Landlord: Oxford Properties
CBRE/NE Representatives: (Landlord team – Steve Purpura, Eric Smith) (Tenant team – Adam Brinch, David Fitzgerald, Robert Fitzgerald, Tim Howe)

Retail Deal of the Year Trillium
Trillium Brewing Co.
Size: 16,000 SF
Address: Thompson Place, 47 Farnsworth Street, Boston, MA
Landlord: Invesco/CrossPoint
CBRE/NE Representative: Brian Cohen

BrattleCourt_aerial_700px_v2Most Creative Deal of the Year
Brattle Court at Harvard Square
Size: 61,858 SF
Address: 1-8 Brattle Street, 17-41 Brattle Street, Cambridge, MA
Landlord: Asana Partners
CBRE/NE Representatives: Dave Pergola Jr., Brian Doherty, Matt Curtin

Life Science Deal of the Year75.125 Extrior Updated 06.2014
Shire
Size: 222,926 SF
Address: 125 Binney Street, Cambridge, MA
Landlord: Sublease – Shire
CBRE/NE Representatives: Steve Purpura, Eric Smith, Brian Cohen

President’s Council Special Recognition
Dynatrace (Five-Party Waltham Mega Deal)

  • National Grid subleased 68,000 SF from Dynatrace at FM Global’s (landlord) 404 Wyman Street in Waltham, MA
  • Dynatrace, represented by CBRE/NE, relocated to 40,000 SF at Boston Properties’ (landlord) Reservoir Place at 1601 Trapelo Road in Waltham, MA
  • Dynatrace’s move to Reservoir Place required JLL to help another client, Constant Contact, restructure its existing lease
  • CBRE/NE Representatives: Ron Friedman, Perry Beal

Industrial Deal of the YearIndustrial Deal of the Year
66 Saratoga Boulevard, Devens, MA
Size: 275,392 SF
Landlord: CIP Saratoga Boulevard LLC
CBRE/NE Representatives: Bob Gibson, Steve Clancy, Rachel Marks, Doug Rodenstein

To learn more about the night, please read more here.

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Recap: 2018 CBRE/New England Boston Market Overview

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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.

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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.

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“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.”

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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.”

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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.

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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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Just Released: CBRE/NE 2018 New England Market Outlook

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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.