Following headline-after-headline leasing in the first quarter, the second quarter remained hot. Groundbreakings and land acquisitions were the themes. Across Boston, two million SF of groundbreakings took place, led by Bulfinch Crossing, Amazon, and MassMutual in the Seaport and 321 Harrison in the South End. Meanwhile, Alexandria and National Development closed on the Necco Garage at the very end of Q1 and have also partnered to buy what was to be GE’s headquarters development site (along with the existing buildings GE plans to occupy). Related Beal acquired a 6.5-acre parking lot from Gillette during the quarter, and these investments, plus additional A Street Corridor acquisitions, add up to nearly $600 million spent to turn this area into the next life science hub in Boston.
Two straight years of quarterly positive absorption in Cambridge were followed by a slight hiccup in the second quarter. However, vacancies fell again because inventory coming out of the market (238 Main Street is going vertical) more than offsets the slight negative absorption. The life science industry is firing on all cylinders, and tenant demand continues to be off the charts. Large leases from Beam Therapeutics, bluebird bio, FogPharma, and Google highlighted the second quarter. At 3.3%, vacancies are flat year-over-year.
Route 128 Northwest continues to lead the suburban market with more than 400,000 SF of positive absorption this year. Vacancies are back to tech-boom levels, and life science migration is a primary driver. Overall suburban absorption was mildly positive, 64,000 SF in the second quarter, despite major tenant changes in the Route 128 South market weighing on conditions. State Street is vacating 1200 Crown Colony and 200 Newport Avenue in Quincy, putting 380,000 SF on the market. This is among several options in this market for tenants seeking large-block availabilities close-in to the city.