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2019 Q4 Market Viewpoint Report Boston Colliers

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It was another healthy year in Boston. Absorption pushed 1.4 million SF, vacancies are their lowest since the dot-com era, rents continue to march higher, and demand remains strong. Our diverse economy is bolstering the market, and Boston is still a top choice for investment capital, both foreign and domestic.

Tenants with impending lease expirations still face a lack of large-block availability. Construction has picked up to help alleviate this challenge, but these projects are not due until after 2020. The next 12–24 months should remain a landlords’ market, since the next wave of development is build-to-suit in 2021. That will not relieve the availability problem much.

Cambridge finished the year strongly, with 675,000 SF of absorption after new deliveries. Both Philips and Akamai began moving into their new homes, driving strong absorption at year-end. The tight market makes it challenging to compare conditions simply by looking at statistics. Vacancies moved up slightly from incredible lows, but demand was strong. Lease-up has been tremendous at Cambridge Discovery Park in Alewife, Cambridge Crossing, and at MIT’s projects in Kendall. As these projects come on line, absorption will follow.

With vacancies at 16.3% — the lowest in nearly 20 years — the suburbs go into 2020 in healthy shape overall. Rents continue to rise, gaining 3.6% on the year. Nearly all submarkets posted gains on the year, though two major exceptions, Route 128 South and Route 495 North, were unable to overcome the departure of State Street and Eisai, respectively. Lab conversions are front and center throughout the suburbs. This market segment should continue its ascent in 2020.Boston’s suburban market hit a bump last quarter caused by increasing vacancies and negative absorption. The Route 128 Mass Pike led in absorption, as it has throughout the year, boosted by the completion of 10 CityPoint. The biggest hit to vacancy in the third quarter was the addition of 100 Crosby Drive in Bedford as Oracle is moving out, creating another large block of suburban vacancy. Despite that, vacancies ended the quarter at 16.4% — among the lowest they have been in nearly 20 years. Rents continue to increase.

 

2019 Q4 Market Viewpoint Report Boston Colliers

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2019 Q4 Market Viewpoint Report Boston Colliers

2019 Q4 Market Viewpoint Report Boston Colliers

Download Report