Credit: Bisnow
Our city continues to grow and change as evident by the following six projects in 2014. Bisnow selected its six transformative developments from 2014, noting “projects underway in 2014 brought amazing change, reviving tired districts and bringing new ones into the heart of the metro area.” It’s standouts are the following:
• Vertex Pharmaceuticals
• VanNess
• Troy Boston
• New Balance in Brighton Landing
• One Dalton
• Partners Healthcare
Credit: Boston Business Journal
Boston Office rents are some of the most expensive nationally and expected to continue upward during 2015. Vacancy in the city has continued downward with value options within the low rise Class A and Class B in the Financial District.
“The vacancy rate in Boston at the end of the fourth quarter was 13.4 percent, the seventh-lowest rate in the country among the roughly 75 markets Reis examined…The national average was 16.7 percent. Average Boston rents rose 0.2 percentage points during the fourth quarter. Most of the cities saw a small decline. Average rent in Boston at the end of the fourth quarter was $32.42 per square foot — fourth highest in the country,” according to stats presented on the Boston Business Journal.
The full BBJ article can be found, here.
Credit: analyticsweek.com
The commercial real estate industry has truly benefited from technology. I entered the industry in 2002 and from then to now is dramatically different; today I can walk down the street, open my tablet and find out what space on what floor is available in any commercial building. This was unheard of 5 years ago and only gets better with version updates of various apps. Not to mention the infusion of data, real-time analytics, and crowdfunding.
The BBJ notes “while data can’t predict the future just yet, big data can tell us the probability of future decisions, which can lead to actionable decision-making.” The article also mentions the benefit to “accredited and non-accredited investors, through a multitude of platforms, have the ability to invest in early-stage companies. What this means for commercial real estate is that everyone’s customer base broadens as fractional “ownership” increases. It also results in more capital outlets and providers for a more competitive landscape.”
You can read the full Boston Business Journal article on its website.
Office building at 100 Cambridge Street in Boston
100 Cambridge Street has a buyer. Intercontinental is a Boston-based real estate firm that focuses on acquisitions, asset management, portfolio management, finance, development, construction management and property management.
From TheRealReporter:
“That’s what we’re hearing,” says one market observer who maintains suitors were drawn to the opportunity listed by Colliers International “in droves” for a unique 590,000-sf facility that includes commercial tenants and state agencies occupying a tower that was revamped from an aging state-occupied structure into a mix of private and public space a decade ago. The initiative has lower levels housing multiple agencies and high-rise floors leased to top-name companies including Cannon Design, a nationally known healthcare architect in 27,500 sf on Floor 14 and law firm Prince Lobel occupying the 21st and 22nd floors. American Student Assistance fills 151,000 sf on six floors and Massachusetts General Hospital is on a trio of leases expiring from April 2015 to June 2016.
Additional building details are available on the property page: 100 Cambridge Street Boston
Credit: Bisnow
Why is Boston better than New York? Our own Jason Weissman chimes in at a Biznow Event.
From Bisnow:
Boston Realty Advisors founder Jason Weissman says Boston outshines New York because it has less exposure to a downturn in government spending. Based on fundamentals and cash flow, he expects to see lots more property sales in 3% cap rate territory in 2015. Retail and office rents still have room for appreciation and greater cash flow will boost asset values. So much so that investors will start searching for deals in outlier markets, namely I-495 and southern New Hampshire.
Credit: Boston Business Journal
Year Up is on the move to 45 Milk Street, leasing all 61,000 square feet of the downtown Boston office building.
Context on the area around Milk Street in Boston, from Wikipedia:
“Milk Street was one of Boston’s earliest highways. The name “Milk Street” was given to the street in 1708 due to the milk market at the location. One of the first post offices in Boston was located on the street in 1711, when the first regular postal routes to Maine, Plymouth and New York were established.”
Historical Context on the building, from BostonHistory.org:
“In 1906, noted architect William Gibbons Preston modified his own 1893 design for this building by extending the Milk St. facade to its present location. The allegorical figures of commerce, fidelity, industry and security are by New York artist Max Bachman. The building’s original owner, the International Trust Company, was founded in 1879 and grew to become one of the largest trust companies in New England in the early 20th century.”
Building Stats
• Type: 4 Star Office
• RBA: 68,927 SF
• Stories: 9
• Typical Floor: 7,659 SF
• Class: A
• Construction: Masonry
• Building Ht: 111′
• Year Built: 1893
• Year Renov: 1981
• Tenancy: Multi
• Owner Occup: No
• Elevators: 2
• Slab to Slab: 12′
• Sprinklers: Yes
• Property Mix: Office (61,778 SF, 89.6%), Retail (7,051 SF, 10.2%)
The Building last sold on 6/10/13 for $21,000,000.
Credit: NBR
Where should corporate branding start and stop? We have seen the T embrace corporate visibility, moving throughout the city, but do you want to see it on the top of all Boston Buildings? I would be in favor of branding on a case-by-case basis, but not across the board.
Banker & Tradesman reports, “financial services giant State Street Corp. was allowed to hang a high-profile shingle atop its 36-story One Lincoln St. headquarters in 2003 and its One Channel Center office complex that opened this past June in South Boston. So, too, was prized biotech recruit Vertex Pharmaceuticals after it moved from Cambridge to anchor Boston’s Innovation District in 2013, and Converse Inc. as it nears completion of its new headquarters at Lovejoy Wharf.”
B&T also includes a quote from Mayor Walsh, offering his perspective on Boston buildings brandishing corporate logos: “if we’re going to have companies invest significant numbers of people in a particular area and take a large portion of the building, I have no problem with them putting a name on a side of the building.”
Credit: Grrouchie.com
Simply put, you know when your business should move into a more formidable space when your business demands it. This might mean annual cost or it might mean image, either way understand what is important to your organization and what amenities are necessary; cost is not always the driver.
Entrepreneur.com offers some general guidance for Boston businesses on the move:
“First, you’ll need to interview several real-estate brokers who have experience in the area where you’d like to rent. Second, identify exactly how much space you’ll need now and in the near future. Factor in growth, but be realistic in your estimate and don’t take on much more space than you need. Then you and the broker can begin looking for spaces that meet your space requirements, budget, location and office layout. Once you find a space you’d like to lease, then you should hire a real-estate attorney to review the agreement.”
Credit: Banker&Tradesman
Office rents will continue to rise and I expect this to continue through 2015 and into 2016. The buyers of the recent office buildings will be looking for their return on investment and that will come from increasing the price per foot they charge tenants.
Banker & Tradesman reports the stage was set “for the big rent hikes to come has been a frenzy of office tower sales in the Financial District, Back Bay and Seaport over the last six months…More than 5.5 million square feet of office tower space changed hands or has been placed under contract between July and September, Collins and Regensburg note in a piece for the New England Real Estate Journal. Another 4 million square feet has hit the market or is about to.”
Additional details on the new office towers and projected office rent rates is available on Banker&Tradesman’s website, here.
The Boston office and retail market is expected to continue its upward march.
Credit: multihousingnews.com
According to an editorial on MultiHousingNews.com, “developers completed approximately 4.2 million square feet of office space over the last 12 months as compared to merely 1.4 million square feet in the previous year. Around 5.2 million square feet currently under construction in the metro area is expected to come online throughout 2016. According to Marcus & Millichap, approximately 3.2 million square feet of office space is set for completion by the end of 2014—a 1 percent increase from 2013—with new inventory being heavily concentrated in the Boston/Suffolk County and Route 128 North submarkets.”
For a detailed indicator of the Boston office market direction, jump over to the MultiHousingNews website.