Colliers In Focus
Colliers In Focus

In a world of constant news and a sea of information, Colliers International | Boston's team of market experts develops and hones the insight, actionable analysis and market intelligence you need to navigate the constantly changing dynamics of the Greater Boston market.
Tenant Demand Is Off The Charts

2017 SEPTEMBER - We are constantly having conversations with clients on a variant of “how much longer will this cycle run?” And it is a good question. This long but slow-growing economic expansion has led to an extended real estate cycle. But that won’t last forever. At industry events people often ask panelists and experts, “What inning are we in?” as a proxy for what the future holds. From a demand perspective, however, the market looks phenomenal and shows no signs of an impending downturn or recession.

Fitting HQ2 in the HUB: What an Amazon HQ in Boston could look like

2017 SEPTEMBER - As you’ve probably seen, Amazon is on the hunt for a second headquarters, dubbed HQ2. But this isn’t just a token location: it is looking for up to eight million SF of space upon full build-out, and the company could employ 50,000 workers. Let’s put some of those numbers into perspective.

The World Of $50 Rents

2017 SEPTEMBER - It’s hard to find value in office space in Boston today, particularly on direct deals: This cycle has been kind to landlords. Rents are up nearly 60% on Class B product, while Class A assets have risen 30% in this cycle. What does that mean for today’s lease renewals or tenants out in the market? Expect your rent to start with a 5 ...

Cambridge Is Now a Lab Majority Market

2017 JULY - For the first time ever, space in the Cambridge market has tilted in favor of lab usage. The recent completion of 50/60 Binney Street and the conversion of 75 Moulton Street have created 11.7 million SF of lab space in Cambridge, overtaking 11.3 million SF of office space. This transition has been a long time coming, as the image below shows...

Kendall Square’s Explosive Growth

2017 JULY - When I recently spoke at the NAIOP/SIOR Mid-Year Roundup, one of the major topics was the shifting and expansion of Kendall Square. The heart of East Cambridge and its center of gravity has changed a lot in recent years. From 2010–2015, up-zoning approvals allowing the expansions along both Main and Binney streets have almost doubled the size of Kendall Square. The area has become increasingly dense, with over seven million SF of development...

User Sales Are Back En Vogue

2017 JUNE - So far in 2017, user sales are far more common than in the previous few years. Coming out of the downturn, user sales—where a buyer plans to occupy the space themselves—drove 22% of all office and industrial property sales volume outside of Boston. But as the market came back to life and volume increased, user sales decreased...

Seaport’s Center Of Gravity Is Shifting

2017 JUNE - Have you walked through the Seaport lately? It is truly amazing how rapidly the neighborhood is changing. Decades in the making, the transformation in this real estate cycle has been astounding. Residential is booming, retail is quickly coming on the scene, hotels are popping up, and the office market is thriving – particularly new product.

Leasing Obstacles for Today’s Office Tenants

2017 MAY -An office space search can be very overwhelming. Whether an organization is building out a new space or renovating an existing office, these processes have become even more challenging in Boston’s dynamic and costly office market. An experienced real estate advisory team can save tenants significant time and money.

During a number of recent client meetings with organizations with lease expirations within the next 12–24 months, conversations have revolved around three major talking points: timing, construction costs, and tenant credit.

NASDAQ’S Run Could Drive Further Class B Rent Gains

2017 MARCH -Boston in recent years has been a market driven by the tech industry. The talent pool in and around Boston has attracted many tech firms, start-ups, and venture capital groups and has had a large impact on the state of the real estate market. These new tech-driven firms have helped push vacancy down and rents up, supporting strong growth quarter after quarter. Tech companies in Boston tend to occupy Class B office space, which has spurred strong growth in the Class B market, with 50% market rent growth in this cycle. Class B market rents have been observed to move closely with the NASDAQ stock index, which is built strategically around four complementary business segments – Tech, Trade, Intel and List. That primarily explains the strength of Class B rent growth in and around the city.

Waltham’s Moving In Different Directions

2017 MARCH -Waltham is often considered the barometer of the suburban office market. And for good reason: It offers close proximity to the cities of Cambridge and Boston and can tap into a deep labor shed in the suburbs. Premier product and new retail amenities have attracted tenant demand, which has cut direct vacancy rates by more than half from early 2010 levels. Direct vacancies ended 2016 at 9.6%, their lowest level since the fourth quarter of 2007. However, this masks changes in underlying fundamentals.

Class B > Class A

2017 FEBRUARY -Boston’s office market has historically been driven by its Class A inventory. As rents in that segment of the market rise, the Class B market rents will usually follow. Not this time around. While both segments of the market have risen in this cycle, it’s been the B market that has led the way.

Shifting Tower Dynamics

2017 FEBRUARY -This has been a very different cycle than is typical for Boston. Thanks to resurgent TAMI sector (technology, advertising, media, and information), and the competition the newly built product in the Seaport presents to the Financial District, typical vacancy relationships are changing. This is particularly apparent for tower vacancies in high-rise spaces (those above the 20th floor) and low-rise spaces in those buildings.

The Inner Suburbs – The Next Big Thing?

2016 DECEMBER -The inner suburbs surrounding Boston and Cambridge are rapidly changing and the real estate community should pay attention.  Their proximity to the job centers of those two cities, thanks to mass transit and highway access, has been a long-time boon.  Millennials have turned their attention to these historically working-class cities.  Lower costs of land and construction allow developers to bring new apartment rentals on line at a lower rate — at or below $3/SF in many instances — than in either Cambridge or Boston.

Cambridge Rising

2016 NOVEMBER -It has been called the most innovative square mile on the planet. Home to world-class research institutions, Kendall Square has created a blueprint for university/industry partnerships and become the epicenter of the life science R&D industry and a tech hot spot, boasting the highest rents in the metro. A who’s who in the tech and life science industries have operations here: Facebook, Amazon, Microsoft, IBM Watson, Akamai, Biogen, Novartis, Genzyme, Sanofi, and bluebird bio, to name a few. The Cambridge Innovation Center (CIC) has propelled the growth of numerous companies since its inception in the 1990s, venture capital firms are right in the thick of it, and MIT continues to drive innovation in the area. The university’s latest venture, “The Engine,” aims to solve the world’s biggest problems in fields from energy to life sciences, supporting companies until they’re ready for venture capital funding. The area’s innovation continues to place it at the forefront of what’s next.

DTX In The Crosshairs

2016 OCTOBER -Downtown Crossing — DTX to locals — is hopping.  A long-time center of commerce in the city, it has undergone several transformations in the past few decades.  The city’s business improvement district, with DTX smack-dab in the middle, has significantly benefited the area, promoting and supporting it and beautifying the streetscape.  Long gone are the days when merchants like my grandfather would purchase their store’s inventory from vendors along Washington Street and bring it back to the suburbs.

Are Charter Schools the New Urban Amenity?

2016 SEPTEMBER -In November, Massachusetts voters will be choosing more than the next president—they’ll be deciding whether or not to expand charter schools across the Commonwealth.  The debate is heating up, and for those residing in districts with statewide assessments in the bottom 25% of schools, this could have long-term ramifications for the real estate market.  Apartment landlords should pay attention.

Changing Retail Habits

2016 AUGUST -In August, Macy’s announced plans to shutter 100 stores, in response to shifts in shoppers’ habits. Stiff online competition is not the only problem facing Macy’s and other retailers. The types of clothing in vogue now—fast fashion—and the merchandising efforts of Macy's formerly exclusive vendors and the broader appeal of that merchandise (once-aspirational brands are now ubiquitous) have hurt foot traffic...

Missed Demographic?

2016 AUGUST -Almost every day another article in the business press reports on Millennials (the generation born between the early 1980s and late 1990s/early 2000s), and rightfully so. They are the largest part of the labor force, and depending on which articles one reads, they are either innovative and creative or lazy and spoiled (or somewhere in between). Hundreds of thousands of apartments have been built nationally in this cycle, and many are targeting these highly educated young people....

Boston's Hotel Market

The city of Boston has made a great effort since 2000 to increase its supply of hotel rooms in order to serve the more than 12 million visitors annually, including tourists, convention attendees and business travelers.

Spotlight on Downtown Crossing - By the Numbers

Boston’s Downtown Crossing – a bastion of history and architecture matched by few, if any, downtown areas in the U.S. – has experienced a vibrant revitalization in the years following the recession and the infamous “hole in the ground.” With the stimulus of public initiative, a recovering economy, and the completion of the long-stalled Millennium Tower project, the area is now one of the fastest-growing residential neighborhoods in the city. Provided below are figures quantifying the area’s revitalization over the past half-decade.

Boston Area VC Funding
Boston-Area VC Funding Hits 15-Year High

The third quarter is closed, and more than $1.9 B worth of capital was invested in Boston area companies – the highest in 15 years according to an article in the BBJ and data compiled by PitchBook.

Boston Tourism Infographic
Boston Tourism

According to local sources, the tourist industry was on fire in the greater Boston area this summer.

SURGING COMMERCIAL REAL ESTATE PRICES
Surging Commercial Real Estate Prices

With pricing reaching new heights in many major markets, some industry professionals are drawing parallels to last cycle’s bubble. Boston is among a group of metros, which also includes New York, London, LA and Chicago, where capital flows and deal activity are surging.

Boston Apartment Market

Living in Boston or Cambridge is an expensive endeavor, and with luxury rentals dominating recent construction activity here, it’s not surprising that rents have been on the rise.

MA Venture Funding – 2015

Over $2 Billion in VC funding has flowed to Massachusetts companies since the beginning of 2015, with nearly half going to Cambridge-based firms.

PRICING TRENDS AND WALKABILITY
Pricing Trends and Walkability

Piggy-backing on our recent analysis of Boston's most walkable neighborhoods, the chart below highlights Real Capital Analytics' new walkability index, which aims to better determine commercial property values.

Walkability in Greater Boston

Boston was recently dubbed one of the most walkable metros in the country, as Smart Growth America has identified several 'walkable urban areas' throughout Greater Boston.

Patents Granted to MA Companies

While buzz would have it that Kendall Square and the Seaport are leading innovation clusters, a significant amount of innovation is taking place in Suburban Boston.

State Unemployment Rate
State Unemployment Rate

Massachusetts' economic outlook remains bright, with the statewide unemployment rate falling below 5% for the first time since 2008 in February.

Office-Using Employment
Office-Using Employment

The greater Boston metro has posted a net gain of 32,600 office-using jobs since January 2008, which marked the beginning of the "Great Recession."

Office Market Rankings
Office Market Rankings

The year-end numbers are in from Colliers offices across the country, and the greater Boston office market ranks among the top five metros in the U.S. for most absorption in 2014, with 4.1 million square feet.

Stem Worker Clusters
Stem Worker Clusters

Colliers Boston Research created the STEM Occupation Composite based on Occupational Employment Statistics from the BLS. Close to 80 occupational categories related to science, technology, engineering and mathematics were included in the composite in order to identify workers in STEM-related fields.

Multi-Family Building Permits - Boston Condo Pricing
Boston Condo Pricing

An increasing population base and lack of available supply pushed median condo prices in the city of Boston to a record high in 2014.

Life Science and Technology Indices Chart
Life Science and Technology Indices

The Massachusetts Life Science Index and the Massachusetts Technology Index have outperformed the broader stock market in the past year, increasing by 46% and 22%, respectively.

Massachusetts Employment Chart
Massachusetts Employment

The state job numbers were released today and an additional 13,500 jobs were added in November.

Research Matters - Graph | Patents Issued by Metro (per 1,000 residents)
Patents and the Innovation Economy

Patent activity is just one more variable we can use to measure innovation in an economy, and once again, the greater Boston area is among the top performers.

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