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

snapshot_Suburban.png
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.

1895_J.W.-Foster-Blvd__ReebokStoreAtrium_4136681895_J.W.-Foster-Blvd__ReebokStoreAtrium_413668.jpg

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.

 

Recap: 2017 CBRE/New England Boston Market Overview – Part 2

In this next installment of our Boston Market Overview recap series, we look to our Suburban market experts. Alison Powers, First Vice President, and Andy Majewksi, Executive Vice President/Partner, have been following suburban migration for some time now. But why is this happening? What are the numbers behind these trends? Their draft picks tell all…

image_1rgb

Draft Pick #1: Alison’s 2016 MVP = Life Sciences

image_2rgb

“In 2016, over 1.3 million square feet was leased to the life sciences sector in the suburbs outside of Boston and Cambridge. That’s a 35% increase in life sciences leasing activity from 2015 resulting in one million square feet of positive absorption in the suburbs.” – APCBRE_2017MARKETOVERVIEW_2-65.jpg

Draft Pick #2: Andy’s 2016 MVP = Industrial


“Despite negative absorption on the office front, the industrial market experienced over 550,000 SF of positive absorption, which marks a 10-year high for the Greater Boston Industrial market. This is why my MVP pick is industrial. Where else on Route 128 can you find a vacancy rate of 6% and 18% rent growth? So what’s causing this upswing? It’s really a function of industrial migration in and migration out.” – AM

image_3rgb

CBRE_2017MARKETOVERVIEW_2-74.jpgDraft Pick #3: Andy’s 2017 Player to Watch = New Construction

“What do Beverly, Waltham, Watertown, Lexington and Newton have in common? New construction and, in some cases, major renovation—there are currently 10 projects across these five times in the works, demonstrating that there are no boundaries to new construction in the suburbs. ” – AM

image_4rgb

Draft Pick #4: Alison’s 2017 Player to Watch = Organic Growth

“There is continued migration outward from Cambridge and Boston of life sciences and even non-life sciences companies that need to accommodate expansion.” – AP

Draft Pick #5: Andy’s Flex Pick = Millennials Aging

“In 2017 the largest cohort of millennials will turn 26. That’s important because it’s the same age that young people start to get more serious about their careers, housing and their future.” – AM

image_5rgb

Draft Pick #6: Alison’s Flex Pick = Generation Z

“Generation Z is 25% of the current population. The oldest members of Generation Z are turning 21 years old next year and will be entering the workforce before you know it. Generation Z is comprised of 60 million people strong—outnumbering millennials by nearly one million—and they are going to boost the suburbs.” – AP

image_6rgb

Stay tuned for our next post, where we will reveal the draft picks chosen by our Capital Markets team at this year’s Boston Market Overview.

Did you miss our first installment of the BMO recap series? Catch up here.