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

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.


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


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.



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%.


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. 


Boston starts the year slowly, but has plenty in store

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

iStock-614436122.jpgIt was a relatively quiet quarter for the Downtown Boston Office market, echoing a theme seen across many of the Greater Boston submarkets—but with an unemployment rate of only 3.7% as of February, Boston’s positioning remains strong.

Vacancy was up to 8.6%, the highest it has been in three years, but asking rents continued to edge upwards.

Bifurcation of Class A and B rental growth has slowed: while in the past year Class B properties had seen much greater gains in comparison to Class A, in Q1 2017, both saw only modest gains.

Most of the activity in the quarter was seen in value low-rise Class A space in the Back Bay. This type of space can be particularly appealing to Cambridge tenants who want to remain in the urban core, but are being priced out of the options on the other side of the Charles River.

Recap: 2017 CBRE/New England – Hartford Market Overview

Next up in our New England Market Overview recap series, we cover the Hartford market. Our Connecticut team presented on the state of the industrial, office and investment markets.

Industrial Market Overview

John Reed, Senior Vice President/Partner, led with an in-depth overview of the Greater Hartford Industrial market.

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“Last year there was 4 MSF of industrial volume and 1 MSF of net absorption. Consequently, the vacancy was down 9.2% from 2015. This led to improving values, rising lease rates, increased sales prices and higher land prices per acre, creating a premium on large industrial sites.” – JR

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“The distribution model has changed. Drivers need to get to their destination and back in one day. Being centrally located in New England has fueled this demand. With the evolution of e-commerce, next-day—if not same-day—delivery will continue.” – JR

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“UPS absorbed 230,000 SF of space at Cornerstone’s 1 Market Circle in Windsor. FedEx Ground is building a 525,000 SF distribution center at 1000 Middle Street in Middletown. You may recognize this as the former 1 MSF Aetna office campus; it is a perfect reuse of this property. This is the fourth FedEx operation established in Greater Hartford in the last four years.” – JR

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“Due to the diminished inventory of quality existing buildings, some users are having to build.” – JR

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Our industrial forecast for 2017 includes:

  • Continued demand for large existing buildings
  • Continued demand for large permitted sites
  • One million square feet of absorption in 2017
  • 2017 will be a better year than 2016

Office Market Overview

John McCormick, Executive Vice President/Partner, and Alexis Augsberger, Vice President, covered the Connecticut Office market.

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“2016 was a relatively flat year for leasing velocity, with renewals outpacing relocations. The market saw approximately 100,000 SF of net absorption and the sublease inventory was reflective of a fairly healthy economy.” – AA

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“The Greater Hartford Office market is still very much a traditional economy. By comparison, in Metro Boston approximately 40% of the tenants in the market for 2016 identified themselves as ‘tech’ companies.” – JM


“Buildings in submarkets with walkable amenities and superior highway access led the way in 2016.” – AA

Our office market forecast for 2017 includes:

  • Increased renewal activity
  • Continued urban migration
  • State and City budget impacts on the region

Investment Market Overview

Patrick Mulready, Senior Vice President/Partner, covered the Connecticut Investment market.

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Our investment market forecast for 2017 includes:

  • Continued demand for industrial product
  • Interest rates will have minor impact on pricing
  • Liquidity not going away
  • Overall lower sale volume
  • Strong pricing for well-positioned assets with good fundamentals

Overall, market fundamentals in Greater Hartford are strong and the outlook is positive for 2017, particularly in the Industrial Sector.

Did you miss our Boston Market Overview or Rhode Island Market Overview recaps? Click on the following link to catch up.



Our Boston: 501 Boylston Street

(Photo courtesy of Putnam Associates)

(Photo courtesy of Putnam Associates)

by Lenny Pierce, Research Analyst

Copley Square’s 501 Boylston Street has always had inherently strong fundamentals due to its size and location. The building takes up nearly an entire city block and connects retail-laden Boylston and Newbury Streets. These factors have created an impressive history of occupancy numbers for the building, including long stretches of zero availability. But even in the context of the building’s strong leasing history, 2014 stands out as a record year of strong activity for the building. With 191,000-sq.-ft. of the building’s 608,000 sq. ft. available in Q1 of 2014, the property saw 140,000 sq. ft. of absorption in six different lease transactions. 501 Boylston’s listing brokers, CBRE/New England’s Ogden White and Kevin Kennedy, feel this uptick in leasing has a lot to do with some key building features that have existed since the building’s original construction, as well as newer elements like a first floor fitness center and the promise of a completely renovated main lobby.

Groups that signed leases in 2014 included biopharmaceutical and medical device consulting firm Putnam Associates, architectural design firm Architectural Resources Cambridge, creative staffing agency Aquent, energy data services firm Genscape and PureTech Ventures, a venture firm focused on healthcare technologies. Features that proved equally attractive to this diverse set of occupiers included 15-foot ceiling heights and large windows, both of which are major draws in the modern office space market. These windows afford spectacular views of Copley Square and 200 Clarendon for many of the building’s tenants, a constant reminder of their premier location within the Back Bay neighborhood.

Reception area at Putnam Associates. (Photo courtesy of Putnam Associates)

Reception area at Putnam Associates.
(Photo courtesy of Putnam Associates)

Sections of Putnam Associates' space features an open ceiling design. (Photo Courtesy of Putnam Associates)

Sections of Putnam Associates’ space features an open ceiling design.
(Photo Courtesy of Putnam Associates)

In addition to the quality of the actual office space, Kennedy thinks the first floor Boston Sports Club is a major selling point for the building. “Tenants today run through a checklist during a tour and will ask about fitness and food opportunities within the building,” says Kennedy, “keeping in mind they will use this address as a recruitment and retention tool for talent.” In addition to the gym, the location has a Pret A Manger on the first floor and 22 other dining options within a five minute walk. In September of 2015, a restoration and enhancement of the lobby will commence to provide a more inviting and functional space, with enhanced lighting and soft seating lounge area affording tenant the opportunity to better enjoy and utilize the building’s incredible lobby.

Lobby re-design by Boston-based Perkins & Will

Lobby re-design by Boston-based Perkins & Will

The strong leasing activity seen 2014 has continued into 2015 with the commitment of another 23,652 sq. ft. to a very exciting and high-profile company relocating to Boston from out of state.  501 is honored to have been selected as their building of choice given the myriad of submarkets and buildings that were considered.  29,652 sq. ft. remains available for lease on the 3rd floor with frontage on both Boylston and Newbury Street. According to White, just as the rest of the building did not have trouble attracting a wide variety of tenants, neither should this space. White considers candidates for this space to be “anyone looking for a quality building in the prime Back Bay location, but most particularly tenants who want exciting, high ceiling, bright, open space with an opportunity for creativity in a build-out design and finish.”

A front-on view of 501 Boylston's large windows at ARC/Architectural Resources Cambridge. (Photo courtesy of ARC/ Architectural Resources Cambridge)

A front-on view of 501 Boylston’s large windows at ARC/Architectural Resources Cambridge.
(Photo courtesy of ARC/ Architectural Resources Cambridge)

501 Boylston's large windows afford tenants a great amount of natural light. (Photo courtesy of ARC/ Architectural Resources Cambridge)

501 Boylston’s large windows afford tenants a great amount of natural light.
(Photo courtesy of ARC/ Architectural Resources Cambridge)









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Still in the Thick of the Cambridge Building Cycle

by Lenny Pierce, Research Analyst

One of the most memorable building surges in the Cambridge market’s history occurred between 1999 and 2002, when it saw over 4.4 million square feet of new development across 27 office and lab projects. This spike in building activity, which was coupled with the later stages of the era, was preceded by 3 years of only 1.2 million square feet of new construction and was followed by period from 2003-2012 that saw only 1.7 million square feet of new construction – allowing us to confidently identify the ’99-‘02 stretch as the definitive peak of the cycle. The 9-year lull that occurred after this peak period was broken in 2013 when Biogen singlehandedly rebooted the market with the preleasing of new 225 Binney Street and 17 Cambridge Center projects for a total of close to 512,000 square feet. These two developments have been followed by 11 more projects, totaling 3.3 million square feet. This recent uptick in building activity in Cambridge is grounds to assume we’ve entered another building cycle. What is less clear is where we are in that cycle. Without a single banner year as the previous cycle had in 2000 – which had 10 building starts  it is harder to say whether we are ramping up, plateauing, or slowing down. However, two key indicators, the scarcity of uncommitted space within the new developments and the demand for space in Cambridge that will need to be met soon, suggest that there is still plenty of building ahead.

New Development

Source: CBRE Research

Of the 4.4 million square feet built during the ’99-’02 cycle, only 60% was precommitted or owner occupied by specific users prior to commencing construction. Examples of buildings being entirely preleased upon groundbreaking during this period included 500 Kendall Street with Genzyme (350,000 SF) and 35 & 40 Landsdowne Street with Millennium Pharmaceuticals (440,000 total SF), but the remaining 1.89 million square feet was entirely available when construction began. In the current building cycle, on the other hand, there is 3.3 million square feet either complete or under construction so far, with a full 3 million square feet or 90% of it precommitted. Cambridge users who have already spoken for this newly constructed space include Ariad Pharmaceuticals taking the entirety of 75-125 Binney Street (388,000 SF) and Sanofi doing the same with 50 Binney Street (258,000 SF). Owner-occupied projects in this cycle have included Novartis’ 550,000 square feet at 181 Massachusetts Avenue and EF Education’s expansion of their campus by 320,000 square feet at Eight Education Way. Projects like these have spelled a current gap between total developed square feet and precommitted square feet that is over 80% smaller than it was in the ’99-‘02 cycle. Much of this discrepancy in precommitment is due to the fact that the number of spec buildings going into the ground in this cycle is down considerably. In the ’99-’02 cycle, 8 buildings totaling 856,000 square feet, including 100 Technology Square (255,000 SF) went into the ground with no preleasing. Our current cycle, on the other hand, has seen only 2 spec buildings going into the ground, 450 Kendall Square (65,000 SF) and 150 Second Street (120,000 SF). 


Source: CBRE Research

The lack of spec building and the 300,000 square feet of available space across these new developments is enough to signal that more shovels will need to hit the dirt, but the current demand in Cambridge bolsters this assertion even further. CBRE/New England considers tenant demand in Cambridge to be how much space the market’s current tenants are looking to expand into combined with how much space prospective new-to-Cambridge tenants are looking for in the area. The current net demand for these 70+ companies totals 2.6 million square feet. The overall availability in Cambridge was 2.6 million at the close of Q1 2015 and with the new uncommitted 300,000 square feet under construction that figure goes to 2.9 million square feet. Since this 2.9 million square feet is made up of small blocks across many buildings, the fact that the availability is technically greater than the demand does not mean much. A handful of big users could find homes in preexisting space, but with 9 different groups looking for over 100,000 square feet each, the market will still need to provide more options. 

Click for larger view

Click for larger view

The answer for growing Cambridge tenants and tenants looking to find a new home in said market will be a willingness among developers to raise that 3.3 million square feet of developed square feet, an initiative that wouldn’t necessarily widen the developed-committed gap for long when considering the abundance of upcoming need. Even though each year so far in this cycle has seen building the 3-4 project range, could we see another 10+ project year like 2000, where close to 2 million square feet of space got under way? 2015 could wind up marking the middle or possibly even the beginning of this building cycle, but all signs point to it falling nowhere near the end.

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Route 128 Business Council: Redefining Your Suburban Commute


by Lenny Pierce, Research Analyst

While Massachusetts has welcomed the recent surge of job creation along Route 128, there is a meaningful downside to this activity that is already being felt by anybody who commutes to and from the region–traffic congestion. The Metropolitan Area Planning Council (MAPC)’s 2011 “Route 128 Central Corridor Plan” estimated that over the next 20 years, population within the corridor will increase by 13,500 and that employment will grow by over 8,600 jobs, generating between 100,000 and 200,000 daily auto trips in the region. The existing congestion, along with forecasts of exacerbation such as those by MAPC, have spurred some groups, such as Biogen Idec and Boston Scientific, to start running their own private shuttles to and from their suburban offices. Fortunately, for many Route 128 commuters whose employers do not provide their own personalized shuttle, there is the 128 Business Council, an independent shuttle service partnered with either specific businesses or business parks to connect major commercial centers to residential areas for a small fee ($3-5 each way for non-members depending on the shuttle, about half of as much for members), often incorporating existing public transit hubs in the process. We caught up with Monica G. Tibbits-Nutt, Executive Director of 128 Business Council, to discuss what she feels sets the organization apart in the world of suburban commuting.

What advantages does a service like yours have over a public service like the MetroWest Regional Transit Authority (RTA) bus system, or the commuter rail for that matter?

Because we are a private organization we have the ability to quickly adapt our services to meet the ever-changing needs of businesses in our service area. RTAs and the commuter rail are public entities that must deal with bureaucracy anytime they wish to adapt their routes or schedules. 128 Business Council regularly alters our schedules and routes to add new members or better serve existing members.

We also have the ability to keep our costs low because we can bid our services out to a wide range of vendors. Additionally, we can customize our vehicles to meet the demands of our members and passengers. If a member company came to us and asked for leather seats and flat screen TVs on their shuttle we could quickly deliver those amenities as long as the company was willing to cover the additional expense.

128 Business Council also offers WiFi and GPS tracking as standard amenities on all our shuttles. These amenities set us apart from the MBTA and allow our passengers to be productive while aboard the shuttle.

A handful of your lines run to business parks in suburban Boston (Hobbs Brook, Reservoir Place, Bay Colony). Do you have an idea of what percentage of your ridership gets dropped off at business parks vs stand alone buildings such as 35 Gatehouse Drive in Waltham?

All of our shuttles serve suburban office parks as well as corporate members. On the Waltham Center and Needham Shuttles ridership is 50% corporate and 50% developer. On the REV Bus (Hartwell Area Shuttle), shuttle ridership is 100% developer. On the Alewife Shuttle ridership is 60% developer and 40% corporate.


128 Business Council’s REV Bus, which services the Lexington area including many properties along Hartwell Avenue.


128 Business Council services people commuting both from the suburbs to the city (Example: Windsor Village>Alewife Shuttle) and from the city to the suburbs (Example: Alewife>Wyman Street). Are you seeing a shift in demand for one direction over the other?

The demand has always been from the city to the suburbs (the “reverse commute”.) We make our shuttles more effective, fill seats and reduce costs by serving riders going from the suburbs to the city on what would otherwise be “deadhead” runs. (No passengers on the return trip from Waltham to Alewife in the morning for example).


The morning schedule for Alewife Shuttle Route B. This particular route starts its return trips with a 4:15pm departure from Bay Colony Corporate Center and ends with a 7:30pm departure from Cadmus and Yottaa headquarters at 100 Fifth Ave in Waltham.


Who are some of your competitors in this space?

Our primary competitors are privately held transportation companies that offer private commuter shuttles to individual businesses. We do not face any competition from other organizations trying to copy our business model of bringing together multiple businesses to share the cost of operating shuttles to serve multiple buildings.

What makes our organization stand out from transportation companies is that as a Transportation Management Organization we offer our members much more than just shuttle service. 128 Business Council offers a full menu of Transportation Demand Management programs ranging from emergency ride home and carpool matching programs, to commuter surveys, to on-site commuter outreach events. We have staff that regularly visits our member companies to promote the commuter programs we offer and provide assistance to commuters interested in finding new ways of commuting to work.


Stops along the Alewife Shuttle Route A in Lexington and Waltham.


Do you think that shuttle service like yours has helped make suburban tenants more competitive in attracting the millennial talent that wants to live in the city and doesn’t want to drive to work?

Yes, absolutely. The demographics of our shuttle riders bear this out. From a recent survey of our riders we know that they are primarily under 30 and live in Boston (particularly Allston/Brighton), Somerville, and Cambridge. 30% have a master’s degree and 90% have at least a bachelor’s degree. 70% rent their house/apartment and 40% do not own a car. For this 40% who do not own a car, our shuttle is their only realistic way of getting to many of these suburban employment locations. This is a talent pool that could certainly find employment in the city, but choose to work for a suburban employer. The convenience of the shuttle allows them to get to their suburban workplace without having to drive. Our survey data shows that overwhelmingly our riders would rather take a shuttle then drive alone through traffic.

According to Tibbits-Nutt, commuters took 180,000 trips (a trip is one ride) on 128 Business Council’s 9 shuttles in 2014 and they estimate that about 700 people use the shuttles. That is 700 people who would likely be driving to work alone if not for the service. “We have seen a shift in how employers view our shuttles” says Tibbits-Nutt. “For many years our shuttles were viewed as a commuting alternative that employees could use to get to the suburbs. We now have companies viewing these shuttles first as a recruiting tool to market their company and second as a means of transportation.” With employers able to use shuttles like 128 Business Council as a recruiting tool, job creation along 128 could surge even further, and without a corresponding surge in traffic issues.

TibbitsNutt_HeadshotMonica G. Tibbits-Nutt, AICP, LEED AP BD+C is the Executive Director of the 128 Business Council. Working in regional planning and transportation, Monica’s areas of specialty are transportation planning, urban design, and sustainability. Her work experience includes public sector transit planning at both the MBTA Advisory Board and as Executive Director of TransitWorks. In addition, Monica has worked in regional planning and development for the Mid-Ohio Regional Planning Commission (MORPC), the City of Columbus Planning and Development office, and the Greater Linden Development Corporation. She received a Masters of City and Regional Planning from the Ohio State University in Columbus and a Bachelor of Science in Political Science and Sociology from the University of Southern Indiana.

An active member of the research community, Monica has been a featured speaker at Next Stop: A National Summit on the Future of Transit, the New England Sociological Association Conference, the Association for Commuter Transportation International Conference, and the Research, Innovation, Scholarship, and Creativity Symposium. In both her work and research, she is most interested in developing regional strategies that integrate sustainable practices into transportation. Toward this goal, Monica’s current work seeks to improve and promote sustainable transportation practices throughout the suburban and metropolitan region.

She is a gubernatorial appointee to the Board of the Metropolitan Area Planning Council (MAPC) serving on the Executive Committee and Legislative Committee. She is also the Vice-Chair of the Regional Transportation Advisory Council (RTAC). She is an active member of the American Institute of Certified Planners and a LEED Accredited Professional in Building Design & Construction with the U.S. Green Building Council.

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