Boston’s retail market did not experience much change in the first quarter of 2018 and remains strong. There has been a lot of press around the impending doom of retail, but, in my opinion, that is over-hyped. The retail environment is constantly changing – clothing stores are seeing a higher percentage of sales online, but “experiential” retailers are expanding. Here are some highlights of Boston’s retail market:
Boston’s Retail Leasing Market
- Average Rent Rates Increased: +2.7% over Q4 2017, +9.44% over Q1 2017.
- Vacancy Rate Increased Slightly: 3.0%. Vacancy rate was 2.9% in second, third and fourth quarters of 2017.
- Negative Net Absorption: Retail net absorption in Boston in Q1 2018 was -297,204 square feet. This means that more retail space became available than was moved into. The past three quarters all had a positive absorption rates.
Boston’s Retail Sales Market
- Sale Volume Increased: Retail sales activity rose during Q4 2017 compared to Q3 2017.
- Sale Prices Increased: The average price per square foot in Q4 2017 was $203.81, compared to $145.74 in Q3 2017.
- One of the largest transactions in the past year was the sale of the retail block at 201 Newbury Street, which consisted of 24,712 square feet for $75 million, or $3,034.96 per square foot.
According to a 2017 Gallup poll, 43% of Americans in 2016 worked from home in some capacity. This number had increased from previous years and is steadily rising. Many developers are taking this into consideration when planning projects and are catering to this popular and growing concept.
Park Lane Apartments in Boston’s Seaport anticipated this as the first apartment building in a new neighborhood. They offer a conference room, club room with billiards, and a 24-hour gym. The newer, Waterside Apartments in Seaport has extended work space in the business center with a Wi-fi connected cafe and a 24-hour fitness center, among many other perks.
How you "work from home" depends upon how you like to work. Some may prefer to be in a luxury building that offers many of these types of amenities, so that while you are "trapped" at home/work, you can sneak in a quick workout at your building's gym or spread out in the business center.
For those who want to search for a private in-home office, the best bet is to look at homes offering a private den or small second (or third or fourth) bedroom. Click here to search for two bedrooms for sale under $1 million to help get started.
There are lots of options in and around Boston. Our team is here to help do a lot of the legwork to help hone in on the properties that would be the best fit for what you're looking for. Feel free to contact us and let us show you how we can help you find your next home (and office)!
Companies continue to look for opportunities to move and expand into Boston. Here are some highlights on the current office market with data from CoStar’s First Quarter 2018 Boston Office Market Report:
Boston Office Rent Rates
Due to high demand, downtown Boston continues to command higher rent rates than the suburban markets. In Q1 2018, the average quoted asking rent in Boston’s central business district was $50.07 per square foot, versus $22.02 per square foot in the suburbs.
Office Space Absorbed Downtown, While Suburban Availability Increased
In Q1 2018, downtown Boston saw net positive absorption of 455,952 SF – meaning, 455,952 SF more office space was leased than became available. The suburban markets experienced the opposite, as they saw net negative absorption of 577,088 SF in Q1 2018. The vacancy rate in downtown Boston is down to 5.7%, while the suburban markets saw their vacancy rate increase to 8.5%.
Boston Office Vacancy Rates by Class
Class C office space continues to experience the lowest vacancy rate (3.6% in Q1 2018), as it has since the early 2000s. In Q1 2018, the vacancy rates at Class A and B space were 9.3% and 8.6%, respectively.
Cabot & Company was treated to a tour of this fab new building and spectacular model units that took our breath away. Ultra-luxury, 5 star amenities, and unique and expansive views. This development has changed the landscape and improved the lifestyle of the Fenway area, with an investment into the future of this sometimes-overlooked neighborhood.
What area of Boston is best to invest in? That is a question we get asked a lot. We are still compiling and analyzing data for our annual investment property report, which provides a comprehensive multi-family analysis. If you would like to receive that report once it is available, please email Eric Shabshelowitz, our VP of Commercial RE. In the meantime, here are some initial observations:
Multi-family prices in Boston have gone up substantially in the past 4 years. In the chart below, the low in April 2012 was $131 and the high in September 2015 was $259. Put another way, the average sale price per square foot in Boston has essentially DOUBLED in the past 48 months.
Boston Multi-Family Sale Price per Square Foot (over last 4 years)
The inventory chart below is also interesting. It shows that total multi-family inventory in Boston has not drastically changed in the past 4 years. While some areas (such as the Back Bay and the Fenway) have seen very few purchase opportunities, inventory in other neighborhoods has clearly risen. This will be discussed in our annual investment property report.
Boston Multi-Family Inventory (over last 4 years)
Contact Eric Shabshelowitz, our Vice President of Commercial Real Estate, if you have questions about Boston's multi-family market.
Boston condominiums had another strong year in 2015. In the Back Bay, condo sales are averaging over $1,100 per square foot (yes, that's the AVERAGE). Beacon Hill and the South End have also seen prices rise.
I think the biggest story of the year though is the Seaport District. In 2015, the Listing Information Network, Inc. (LINK) recorded 184 condo sales in the Seaport District at an average of $1,107.66 per square foot. By comparison, in 2014, there were 83 sales at $610.37 per square foot. That's an increase in sales volume of 122% and a price increase of 81%. Quite a year-over-year jump!
With a number of luxury condo developments underway and businesses flocking to the Seaport (including the recent announcement that GE is planning to relocate its headquarters there), this trend is likely to continue. One area to watch is South Boston. Connected directly to the Seaport District, South Boston condos averaged $550 per square foot in 2015 and I think a number of the employees filling these new Seaport District jobs will be looking at South Boston condos as attractive alternatives to the units being built in the Seaport District.
Below are some charts compiled by LINK with additional data on Boston's condo market in 2015:
If you have any questions about Boston's condo market, don't hesitate to contact us!
West Roxbury is turning into one of Boston's most active neighborhoods. Our Vice President of Commercial Real Estate, Eric Shabshelowitz, has personally been active there and was the #1 agent for multi-families in 2015 based on MLS.
Here's a quick snapshot showing why West Roxbury is so popular:
Multi-family prices have trended upwards over the past 5 years (above chart shows price per square foot since January 2011). The average sale price per SF in 2011 was $162. In 2015, West Roxbury multi-family sales were at $239/SF (a 47.5% increase from 2011).
One of the drivers behind this increase is rent rates. The chart below shows average rents over the past 5 years. While not a drastic increase, the rents are progressing upwards. With rents in downtown Boston continuing to rise, this trend in West Roxbury should continue. The Days on Market chart, which is also below, shows that demand for West Roxbury apartments is growing (dropping from 95 DOM in 2011 to under 60 DOM now).
If you have questions about West Roxbury, or investing in any other emerging Boston neighborhood, contact Eric Shabshelowitz.
Boston's retail market also remained strong in Q3 2015. Vacancy was down to 3.7% at the end of the quarter, compared with 3.9% in Q4 2014. Asking rent rates were also up - at $17.83/SF, up 5.38% from four quarters earlier. (Remember, those averages are across the greater Boston area - in Q3 2015, average quoted rent rates were $90.80/SF in the Back Bay and $110/SF in the Midtown/Downtown Crossing area).
As the chart above shows, there is not a great deal of new construction retail space scheduled to be delivered in the next year - and much of what is, has already been committed to tenants.
Sale prices have trended generally up. The chart below is a little deceiving in the sense that it covers so many different areas. However, I wanted to share it because it shows how strong 2015 started for Boston retail (data for the 2nd half of 2015 will be out in the coming weeks).
Contact Eric Shabshelowitz, our Vice President of Commercial Real Estate, if you have any questions about or need help with Boston retail space.
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