Blog :: 09-2019

A Look at Boston's Most Popular Areas for Office Space

When evaluating “Boston” office space, some of the most popular locations companies consider are: Back Bay, Seaport, Financial District and Kendall Square (which is actually in Cambridge, not Boston).*  How do these areas compare?

 

Market Rent Rate ($/SF)

Source: CoStar
 

Sitting between two of the best educational institutions in the world – Harvard and MIT – Kendall Square is highly sought after by companies looking to source from the highly educated workforce in the neighborhood.  Kendall Square continues to have the highest average office rental rate in the area. 


Vacancy Rate

Source: CoStar


The vacancy rate in the Kendall Square office market is also the lowest, which is understandable given the high demand for this space.  Projections show that the vacancy rate is expected to increase substantially in the next few years.  That is primarily due to the large amount of space currently being developed (see chart below) – it is expected that this supply will outpace demand.  While the rent chart forecasts steady to slightly lower rent rates for Kendall Square, it is foreseeable that rents will drop even more. For landlords, this means they should consider locking tenants into long term leases now at the current, higher rent rates; for tenants, this means they are motivated to sign shorter term leases and then negotiate more favorable lease/rent terms in a few years.


Under Construction

Source: CoStar


The amount of office space under construction in the Back Bay and Financial District has remained low. Back Bay is predicted to regain its position of having the lowest vacancy rate in 2021 – partly due to this lack of new construction, but also because many companies have a strong desire to be there.  

While the rent chart indicates the Back Bay, Financial District and Seaport will all follow a similar pattern in terms of rent growth/stabilization, based on the office space currently under construction and forecasted vacancy rates, it is likely that Back Bay office rent rates will increase at a greater pace.

Understanding Boston’s office market trends is critical for both landlords and tenants to understand in making leasing decisions.  Please let us know how we can help you complete an evaluation for your company.  Start your search for Boston office space here.
 

* Certainly, there are other areas and neighborhoods that should be considered as well.  If you are planning your Boston office move, please contact us and we can work with you on a complete assessment based on your requirements.

 

 

 

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Boston Landlords: 10 Tips for Renting an Apartment that is Still Vacant

September 1st has come and gone. Boston’s prime rental season is over and the number of renters out there has decreased sharply. However, all is not lost. Here are 10 tips to help get that apartment leased:

1.  Make Necessary Repairs.  If something is clearly broken (e.g. cracked windows, doors that do not close, etc.), many prospective renters will see that as a red flag. 

2.  Deep Cleaning.  Has the apartment been cleaned since the last tenant moved out? Prospective tenants this time of year generally have more options and are more likely to scrutinize unclean apartments.    If the apartment windows have not been cleaned (inside and out), that is a must-do to help maximize the natural light.

3.  Freshen Up the Paint and Floors.  Without furniture, scuff marks become focal points.  Not only will a fresh coat of paint help the apartment show better, but now is the best time to get that done since there are no tenants to work around. The same is true with the floors – refinishing hardwood floors and replacing carpet (with new carpet or hardwood flooring) can make a world of difference.

4.  Improve Curb Appeal.  Depending on the type of rental that you own, there may be limits to what you can do to improve the curb appeal.  However, for prospective renters, their evaluation of your apartment begins even before they step into the unit.  Put yourself in their shoes and walk-up to the building – how does the landscaping look, is the mail in boxes or scattered in the foyer, are the common areas clean, are the hallway lights working?

5.  Take New Pictures.  Nearly all renters’ searches begin online, so pictures will make the first impression. If you have been using the same pictures, take new pictures to give a fresh look.

6.  Consider Going Pet-Friendly.  For renters with pets, they will ONLY look at pet-friendly apartments.  If you have been advertising your apartment as not accepting pets, then there is a new audience of tenants that you could reach. However, careful consideration needs to be given here – for instance, some condo associations prohibit pets.

7.  Change the Lease End Date.  Consider entering a lease until June 1st, rather than doing a lease until September 1st. September 1st has tended to be the biggest turnover date in Boston, but June 1st is a popular lease turnover date too. Additionally, if you miss a tenant for June 1, then you still have several months of “prime” rental season to work with.

8.  Maximize Your Listing Exposure.  Working with a real estate broker can help maximize your exposure.  For instance, here at Cabot & Company we utilize a number of listing and advertising platforms in order to reach tenants.  Not only does the tenant typically pay the brokerage fee, but we provide a credit check and manage the lease signing and collection of upfront payments.

9.  Offer Incentives.  Agreeing to pay all or half of the broker’s fee can help alleviate a renter’s upfront moving costs.  If the renter needs to come up with the first month’s rent, last month’s rent, month security deposit and a broker fee, that can work out to a sizable amount. Foregoing the requirement for the last month’s rent and/or accepting a lower security deposit can also help.

10.  Consider a Rent Reduction.  This is the last tip, but probably the most important.  If you have already tried some/all of the tips above, then the market is saying that you are asking too much.  It is also important to consider the impact of missing an additional month’s rent as opposed to reducing your asking rent – generally, you find that the numbers work out that you are better off agreeing to a lower rent for a sooner move-in date than missing out on a few months of rent while chasing a higher rent.

 

 

Back Bay Brownstone Return on Investment: A Case Study

In 1992, Shelagh Brennan of Cabot & Company and Paul Gleason of Fairfield Realty sold 4 unrenovated Back Bay buildings located at 47, 49, 51 & 53 Hereford Street for $1,020,000 (equal to $255,000 per building) to The Glynn Companies. The package included a parking area in the rear of the 4 buildings that accomodated 10 cars. That same year, the developer was granted an easement on the adjacent corner building at 45 Hereford Street to allow access to the parking lot. The developer later purchased the building at 45 Hereford Street in 1999 for $1,100,000 - now owning the entire block.


September 25, 1992 - Globe Staff Photo/Pam Berry
 

The properties were renovated and rented as apartments, and for the last 27 years experienced a robust rental income.


From Boston Globe, September 25, 1992
 

In 2017, The Glynn Companies began the renovation of 53 Hereford Street (building on the corner of Newbury Street) and added the parking area. Noted architect Guy Grassi designed 16,000 square feet of new construction office space. The building is completed and now known as 321 Newbury Street.

 

The present day estimated value of these properties is $37 million. Back Bay has outperformed the majority of neighborhoods in Boston and we do know owners that purchased their buildings in the Back Bay for $100,000-200,000 that are now worth $6-8 million (and more). The long-term return on investment for these buildings is huge, but it is also not uncommon for us to see some of these long-held buildings be under-rented or under-utilized. Depending on owners' goals, there may be opportunities to improve the property to boost returns and/or sell the property and invest the proceeds in properties that would generate higher annual returns, such as through a 1031 deferred tax exchange. This case study is a great example of how landlords can hold choice assets, renovate, develop and generate higher rental income, and hold for generations to come.

 

 

Boston Condo Market Outlook - Fourth Quarter 2019

Boston Home Prices Are Up  •  Number of Sales is Down  •  Inventory is Low

Curbed Boston reported transactions in the downtown Boston luxury condo market during the Summer months saw significant prices jumps and average sales prices were up nearly 23% year over year in the Spring.  Downtown areas include Back Bay, Beacon Hill, South End, South Boston, the Seaport, North End, West End, Midtown, Fenway and Charlestown.  The average sale price was $4,395,698 which represents an increase of 22% annually and 22% quarterly. 

The average price per square foot was $1,965, up 18.3% annually and 22.8% quarterly.
The median sales price jumped to $3,510,3000, up 21% annually and 33.7% quarterly.

Reasons for housing prices and rents rising are “fueled by a growth in jobs downtown, foreign investors looking for a safe place to put their money, and young people pooling their resources and doubling, tripling, or quadrupling up” according to Barry Bluestone, Dean of Northeastern University School of Public Policy and Urban Affairs. 

Keep in mind the helpful factor of Interest Rates at a steady low hovering at 3.0% - 4%.

In summary, prices are up, inventory is down and the future looks expensive!

 

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How to COUCH Your Space

Now that you have moved into your new apartment, you might be asking yourself “Where do I buy furniture in Boston”?  Have no fear, you are surrounded by furniture stores! Some even offer free design service with a purchase.

 

Mattresses

Boston Luxury Beds - Luxury Beds in the Heart of Boston
https://www.bostonluxbeds.com

Mattress Firm - Several locations in and around Boston
www.mattressfirm.com

Boston Bed Company – Sleep with the Best
1113 Commonwealth Ave., Boston

 

Furniture Stores

$Boomarangs – Newish stuff for spendthrifts
716 Centre St., Jamaica Plain
www.shopboomarangs.org

$Ikea – Like to assemble your own furniture?
www.ikea.com

$$West Elm – Trendy and chic
160 Brookline Ave., Boston
www.westelm.com

$$Nadeau – Furniture with a soul
750 Memorial Drive, Cambridge
www.furniturewithasoul.com

$$Cort Furniture Outlet – New and previously owned furniture
155 N. Beacon St., Brighton
https://www.cortfurnitureoutlet.com

$$$Room and Board – Five floors of 90% American made furniture
375 Newbury St., Boston
www.roomandboard.com

$$$Circle Furniture – For those who don’t have square taste in furniture
31 St. James Ave., Boston
199 Alewife Brook Pkwy. Cambridge
www.circlefurniture.com

$$$Mitchell Gold + Bob Williams – Masters of modern home furnishings
142 Berkeley St., Boston
www.mgbwhome.com