0 CRES Stats Report | Week Ending January 5th

CRES Stats Report | Week Ending January 5th

  • 34 spaces hit the market as available in the subject area in the last 14 days, equating to ~280,000 SF, which is very typical over the past few months;
  • 20 spaces (over 1,000 SF) came off the market equating to ~125,000 SF;
  • The current availability rate is the highest ever at ~16.5MM SF, or about 14% total availability.  About 4MM SF of that number is sublet availability.

0 Boston Tech Firms Are Laying Off Hundreds. Will The Office Market Feel It?

In Cameron Sperance’s latest, he says that, “TAMI tenants accounted for 40% of all office transactions in Boston’s central business district last year.”  Fresh off of over 140 leases in 2019, Managing Partner of Boston Realty Advisors, Wil Catlin said, “Office space in Boston has become a commodity, and commercial landlords are stepping up to ensure their asset is ready for today’s workforce. It’s a competitive environment and the landlords with quality, ready-to-go space are getting deals done.”

By Cameron Sperance | Bisnow | March 5, 2020

A string of recent layoffs in Boston was bad news for the city’s typically robust tech sector. But analysts say the furloughs have more to do with normal business operations than signs of a tech pullback from Beantown.

Cambridge-based Akamai Technologies cut around 75 jobs in early February. Wayfair laid off 550 employees worldwide, including 350 employees at its Boston headquarters, Feb. 13. The following week, Boston-based software company LogMeIn cut 300 jobs, nearly 70 of which were in Boston. Agricultural tech startup Indigo Ag then announced at the end of last month it was laying off 150 employees.

Wayfair’s job cuts were tied to the company’s previous overexpansion. LogMeIn said its layoffs were due to “evolving priorities,” per the Boston Globe. Indigo Ag is “focusing resources on the fastest growing aspects of the business,” the company said in a statement to Bisnow.

Akamai, Wayfair, LogMeIn declined or didn’t respond to requests for comment. But Boston real estate experts don’t see the layoffs impacting the office market.

“I don’t sit at the dashboard of Wayfair, but it’s normal to right-size,” Boston Realty Advisors Managing Director and Senior Partner Wil Catlin said. “What’s happening is labor is your No. 1 item on the [income statement]. But if you choose to let go of 10% of those people, you’re not going to get rid of 10% of your office space. You’re getting rid of that salary component.”

The February layoffs followed Needham-based TripAdvisor’s 200-job cut in January. Even if the layoffs are perceived as standard business practice, the impacted companies are leading office tenants across Greater Boston, which means this could ripple through property. Numerous tech companies, including Indigo Ag, are actively seeking hundreds of thousands of square feet for office expansion, according to independent brokerage documents obtained by Bisnow.

Catlin, who focuses on small to midsized tenants, doesn’t expect that demand to go away. A little more than 70% of the active tenants of that size are TAMI (tech, advertising, media and information) companies, Catlin said. Office developers are almost exclusively building for those kind of tenants.

“Today, subleases are few and far between and typically lease off market,” Catlin said. “Office space in Boston has become a commodity, and commercial landlords are stepping up to ensure their asset is ready for today’s workforce. It’s a competitive environment and the landlords with quality, ready-to-go space are getting deals done.”

Boston is the third-fastest growing tech hub in the U.S., according to job listing site Indeed. But housing production hasn’t kept up with the surge of new workers flooding into Boston, pushing costs higher and higher. Boston is the second-most-expensive city to own a home, according to a January report by moving research firm Move.org.

The high cost of living could be weighing on employers determining who stays in the urban core and who could be employed in a cheaper environment.

“It’s getting tougher and tougher to keep those borderless sales jobs in downtown Boston,” Hunneman Director of Research Tucker White said.

Other major Boston companies have been moving select operations out of the city for years. Fidelity Investments announced in 2011 it was moving 1,100 jobs from its downtown headquarters to other parts of the country. Liberty Mutual maintains its corporate headquarters in Back Bay, but has also built a Plano, Texas, campus where the insurance provider is expected to eventually employ 4,000.

Tech companies could be looking to do the same, especially with artificial intelligence expected to impact as much as 25% of all U.S. jobs, including many tech jobs.

“Wayfair is committed to Boston and that’s allowed them to grow, but at the end of the day, they’re still paying a comparatively high real estate cost to other markets and can hire similar personnel elsewhere,” White said.

There may have been a string of early 2020 tech layoffs in Boston, but there have also been some industry wins.

Boston-based restaurant tech firm Toast is now valued at $4.9B after a $400M round of fundraising. Its revenue increased 109% in 2019 due to thousands of new restaurants using its payment hardware, Toast announced last month.

Following its planned merger with sportsbook technology provider SBTech, DraftKings is expected to be valued at $3.3B. The fantasy sports company is headquartered in Back Bay and has the leading U.S. market share for sports betting, according to Morgan Stanley.

Amazon continues to expand its tech reach across Greater Boston, with new offices planned for Medford and the Seaport.

There are 23,764 open tech jobs across Massachusetts — with more than 9,000 in Boston alone, according to Burning Glass Labor Insight data. That is more than 1,000 more open positions than there were at the end of 2019.

The collective, ongoing growth is enough to offset the layoffs, according to one of the state’s leading tech voices.

“When you look at each of the examples [of layoffs], there are real business reasons for it and [it] doesn’t reflect a larger trend in the economy,” said Pat Larkin, director of the Massachusetts Technology Collaborative Innovation Institute. “We don’t view what happened as a trend.”

Professional, scientific, technical services and information tenants, which encompass the TAMI sectors, have the largest office footprint in Boston, with a little more than 34% of the overall office sector, according to Newmark Knight Frank. TAMI tenants accounted for 40% of all office transactions in Boston’s central business district last year.

Despite the layoffs, strong demand coupled with job growth from burgeoning sectors like cybersecurity and digital health keep brokers and landlords cautiously optimistic in signing deals with tech tenants.

“Landlords don’t want a repeat of the bust era and are being mindful to sign tenants that can perform to the lease terms they have available,” Catlin said.

0 Oxford kicks off plans for first Boston tower

Oxford kicks off plans for first Boston tower

Oxford Properties has kicked off development review, one of the first steps in the city’s approval process, for its first ground-up tower in Boston, a 24-story office on the edge of Boston’s Chinatown neighborhood that will span 625,000 square feet when complete.

Oxford is the real-estate arm of Canadian pension fund OMERS, and has more than two dozen new development projects in the work worldwide. The tower at 125 Lincoln would be Oxford’s first new construction in Boston, outside of its redevelopment work at 500 Boylston/222 Berkeley, 125 Summer St. and other offices.

Mark McGowan, Oxford’s vice president and head of development in Boston, said the company has not yet determined whether to wait for a tenant to lease space prior to construction, or to build on a speculative basis.

Oxford bought the existing five-story property at 125 Lincoln St. in 2017 for $40 million. The property has some office and above-ground parking, but its ground floor houses both C-Mart Supermarket and Hei La Moon — a grocery store and restaurant that are culturally significant to Boston’s Asian community. McGowan said Oxford recognizes that importance.

“Because those are cultural institutions, we’re really focused on making sure whether there’s a place for them back in the building or a great relocation option. We’re serious about that,” McGowan said in an interview. “For us as a long-term owner and operator, an important piece of the project is making sure that they are all treated well, and we can figure out what the best long-term place for them is. We’re super sensitive to that.”

0 Can the Supply of Office Space in Boston Keep up with Demand?

office buildings in boston on the waterfront

Credit: Banker&Tradesman

The Boston market will continue to grow through 2018.  How will this affect office pricing in the years to come?

From Banker&Tradesman:

“The challenge you have in the city of Boston is: do we create too much supply and get to a point where we’re not seeing rent growth?” said Mitchell Roschelle, PwC’s national practice head of real estate advisory. “We heard this quarter in the survey a little bit of concern on the part of some investors about the new supply to the market. How that supply performs is going to dictate whether we see investors flooding the market with capital.”

The tenant retention rate was 68 percent in the first quarter with landlords offering an average of five months of free rent, according to the survey. Cap rates averaged 5.7 percent in the Boston central business district and 7.2 percent in the suburbs. Boston is one of 32 U.S. office markets expected to remain in expansion phase in 2015, the PwC report said, with employment generating demand for office space outpacing new supply…San Francisco, which shares many of Boston’s market characteristics, is expected to contract in 2015 and enter a recession mode with negative rental growth in 2017.

0 745 Atlantic Ave. Purchased by Oxford Properties for $114.5M

Office building at 745 Atlantic avenue in downtown Boston

Credit: BBJ

Oxford Properties continues its buying spree by plunking down $114.5 million for 745 Atlantic Avenue or $657 per square foot. 745 Atlantic Avenue is home to WeWork and Dain Torphy as well as a number of companies.  WeWork will be building out a Café on the 1st floor as part of their future expansion.

From the BBJ:

“It really fits our profile of what we like to buy for the long-term: Class A assets in downtown cores near transit-oriented locations,” said Chad Remis, the head of Oxford Properties’ Boston office.

Its $114.5 million acquisition of 745 Atlantic, which closed May 29, is more than double the $54.65 million sale price 745 Atlantic fetched in 2003. The property sold again in 2008 as part of a $1.7 billion office property acquisition invovlingBeacon Capital Partners and Charter Hall Office REIT of Sydney, Australia.

You can read the full article on the Boston Business Journal website.

0 186 Lincoln Street Sells for $20.6M

Lincoln Street office building in Boston

Credit: Banker&Tradesman

Building trades continue with Brickman of New York acquiring 186 Lincoln Street for just over $300 per square foot.
Banker&Tradesman offered context on the sale, indicating “the 68,526-square-foot multi-tenant office building near South Station is 70 percent leased, with tenants including Roche Diagnostics, Full Contact and Greystone Solutions…The South Station submarket contains 1.3 million square feet of office space in 22 buildings, 85 percent of which is class B product.”

You can read the full B&T article, here.

0 ​Roxbury Retains Suffolk Construction

Suffolk Construction decides to stay put in Roxbury. In a conversation with the Boston Globe, “Suffolk CEO John Fish said his company spent around $600,000 ahead of the planned South Boston move but ultimately reversed course for a variety of operating as well as cultural reasons. ‘We studied the hell out of it,’ Fish told the Globe. ‘At the end of the day, it’s not us. We are a very proud organization, and I think Roxbury is a home we’re very proud of.'”

Suffolk Construction building in Roxbury

Credit: The Boston Globe

You can read the full article on the Boston Globe’s website.

0 Boston Tops US in CMBS Loans

745 Boylston Street office building in Boston

Office Building at 745 Boylston Street in Copley Sq.

Boston leads New York, D.C., Chicago and L.A. not only in the bid for the 2024 Olympics, but also for CMBS loans.

The Boston Business Journal is reporting the “percentage of Boston-area commercial mortgage backed security real estate loans with late payments is its lowest in months and is among the best in the country, according to new data from real estate information provider Trepp,,,According to Trepp, 2.84 percent of Boston-area CMBS loans were 30 days delinquent or more as of the end of November. A year ago, the rate was 4.02 percent. The decline has been more or less steady, with slight increases a few months…The Boston-area compares especially well with other major U.S markets.

You can find more information on the BBJ’s website.


0 Tech Initiatives Set for Boston

screenshot of Boston's parking app

Credit: BBJ

Looking to use your smartphone to pay for parking in Boston?  Thank the Mayor, who pushed a new app out the doors of city hall and launched in as a pilot in Back Bay. It was one of the Mayor’s six technology-centric initiatives announced recently. The full six tech initiatives are the following:

1.    Boston drivers can now feed their meters with a mobile app.
2.    Boston’s new partnership with SAP.
3.    The creation of “StartHub.”
4.    Leveraging big data.
5.    The unveiling of a “startup czar” position.
6.    New 3-1-1 upgrades.

You can read more on each of Mayor Walsh’s tech initiatives for Boston on the BizJournals website.