Commercial

How Much are Rents for Retail Space in Boston? (Summer 2019)

Rents for retail space in Boston have generally been increasing over the past 10 years, and the amount of vacant space has decreased.  However, over the past few months, we have started to see a slight pull-back in retail rents.  This has been more evident in some areas than others.  The chart below shows the 10 year trends for the Boston market area as a whole, which stretches well beyond the City.
 


The table below highlights the current market conditions in a few areas in and around the City of Boston.  The average asking rent across these areas is $49.47 per square foot (per year).  While the table presents area averages, it is important to note that there are sections within each of these areas that command higher rents.  For example, asking retail rents on Newbury Street can approach (and exceed) $200 per square foot in some cases; though there are certainly spaces available well below that level.  The reported vacancy rates throughout most of the City remains low - trending below the vacancy rate for the Boston market area as a whole.
 

Note that these charts and statistics were compiled with data from CoStar.  If you have questions about the Boston retail market, need help finding tenants for your property or are a business in need of finding a new retail space for your business, please contact Eric Shabshelowitz.


 

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Micro Housing in Boston

Good news for developers: Boston recently initiated a "Compact Living" pilot.  It's a two-year program that will allow developers to build so-called micro housing units in the City (though the preferred term is "compact unit" instead of "micro unit").  Boston has been considering such a policy for a while, and this two-year experiment will let the City determine how well it works.  

In order to build micro housing units in Boston, developers need to meet a number of standards.  This includes complying with design standards, inclusionary housing requirements and following specific processes and procedures for approval.

Micro housing is often a hotly debated topic.  Opponents typically raise concerns about density and displacing families (who need larger units to accommodate all family members).  On the other side, micro units help promote affordability by creating more units and they help fill an underserved area of housing demand (according to Boston, the number of single people and couples is 2/3 of the City's population, but the number of studio and one-bedroom units is only 1/3 of the City's housing stock).

For more details on the pilot specifics, click here for Boston's webpage on the Compact Living Pilot.  If you are a developer looking for micro housing opportunities in Boston, contact Eric Shabshelowitz to help with your search.

 

 

 

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  1. Peter Parkar on

    Hey Eric, Micro Housing a great idea and it will work well definitely. Good post with good idea.

    Boston Office Rents: Back Bay vs. Financial District

    Searching for office space in Boston?  Whether focusing on the Back Bay or the Financial District, businesses considering one of them generally ask us about options in the other.  The Back Bay and the Financial District each have their advantages.  Here is a quick comparison of the rent and vacancy rates of the office markets in each of them:

    Back Bay


    Source: CoStar


    Source: CoStar

     

    Financial District


    Source: CoStar


    Source: CoStar

     

    You can start your search for Boston office space for lease here.  As always, don't hesitate to contact us with questions or for help finding your new office space.

     

     

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    Update on Boston Business Trends

    One economic indicator that many businesses and real estate investors monitor is employment.  The Boston Planning & Development Agency recently published a report titled “Trends in Boston Business Establishments & Payroll Employment”, which provides some useful data.  Here are some highlights:

    • In 2016, Boston’s total payroll and non-payroll jobs increased to 794,038, up from 669,423 in 2010.  Total jobs are forecasted to reach 829,000 by 2030.
       
    • In terms of job density, the commercial core of Boston has the highest density.  Downtown/North End had 163,845 jobs per square mile in 2015; Mattapan, by contrast, had 981 jobs per square mile.
       
    • The “Health Care and Social Assistance” industry has the most payroll jobs in Boston, with over 140,000 in 2016.  The second highest is the “Professional, Scientific and Technical Services” industry at 80,524.

    As it is based on census data, some of the analysis is a little stale (most of the data is from 2015-2016).  However, it does support that Boston continues to add jobs and is expected to do so for the foreseeable future.  Continued job growth is good for real estate investors, as those employees will need places to live.  It is also good for businesses, as those employees could be consumers of their goods and services.

    There are a number of strategies investors can employ when deciding what opportunities they want to pursue.  Contact one of our investment property experts to formulate a plan and begin executing on it. 

    Or, dive right into your search!  Whether you are looking for multifamily or commercial, you can start your search for investment property in Boston here.  

     

     

    Boston Retail Market: Q1 2018 Update

    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.

               

    Are you searching for retail space in the Boston area?  Feel free to browse available retail space for lease and retail space for sale, or contact us for assistance.

     

     

     

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    Current State of Boston's Office Market: June 2018

    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.   

     

    Are you searching for office space in the Boston area?  Feel free to browse available office space for lease and office space for sale, or contact us for assistance.

     

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    Update on Boston's Multi-Family Market - 2015 Year-End

    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.
     

    Q3 2015 Boston Retail Market Update

    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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