Commercial

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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Q3 2015 Boston Office Market Update

Boston's office market remained strong in Q3 2015. Overall vacancy in the Boston area decreased to 9.1%, down from 9.2% at the end of Q2 2015 and 9.3% at the end of Q4 2014. Vacancy in Boston's central business district (CBD) was down to 7.6%, compare that with Q4 2014 when vacancy was at 8.3%. Interestingly, the vacancy rate for Class A properties is at 9.9% vs. only 5.2% for Class C properties. Rents are also up - in both Boston's CBD and the suburban markets.

 

There has been a lot of press about the construction boom in Boston. In the first chart above, showing scheduled deliveries of new construction office space, note that most of it has already been leased. One common question is whether it is just companies moving out of old space into new and so it will create vacancy in their old building. However, that has not yet been the case - more office space continues to get leased than sits on the market (net absorption for Q3 2015 was positive 1,152,407 SF).

Investment interest in Boston office property also remains strong. Cap rates continue to stay below national averages. Investors are also dominating the market, as only 7% of Boston's office space is owner-occupied.

Contact Eric Shabshelowitz, our Vice President of Commercial Real Estate, if you have any questions about or need help with Boston office space.

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Cabot and Company Finds Cafe Quattro a New Space

Cabot and Company finds Café Quattro a new space

Vice President and lead Commercial Real Estate broker, Eric Shabshelowitz, recently helped find a new space for the beloved Café Quattro in the South End! Previously located on Somerset Street downtown, Café Quattro thought the South End would be a great landing spot for the new location.

Now situated at 817 Harrsion Avenue near Boston Medical Center, Café Quattro has become a staple for many of the city's medical professionals and South End residents. The Italian-based restaurant boasts a full menu of classics and new takes, garnering the attention of Zagat.

"The menu spotlights hand-tossed thing-crust pizzas, including its signature quattro formaggi and unique variations like pear and parmigiana, plus housemade pastas, panini, salads, soups, and a full espresso menu for a caffeine fix on the go. The menu spotlights hand-tossed thin-crust pizzas, including its signature quattro formaggi and unique variations like pear and parmigiana, plus housemade pastas, panini, salads, soups and a full espresso menu for a caffeine fix on the go." - Zagat

Cabot would give Café Quattro two thumbs up, but we have a slice of the quattro formaggi in our other hand! 

Stop into Café Quattro and tell owner, Evan, that Cabot sent you!

Contact Eric Shabshelowitz for a free market analysis of your property and for his expertise on the Boston commercial real estate market.