Will the Boston skyline elect to push heights in the upcoming years?
“Going higher is a fix to a lot of different things, from the housing shortage to taking the heavy load off the freeways into our city,” Perry Brokerage Director of Intelligence Brendan Carroll said.
Despite claims it has reached peak prices, Boston is still the third-most expensive city in the U.S. to rent. It has a cost of living nearly 40% higher than the national average, and low supply is keeping prices high. Cities around the world are in similar situations and have taken to building up as a way out of housing crunches.
Credit: Boston Globe
The South End is not known as a large office market with only 13 buildings totaling 928,626 square-feet, according to CoStar; however, a new 11-story office building at 321 Harrison Ave. overlooking the Massachusetts Turnpike was recently approved.
From the Boston Globe:
The $80 million project, to be built by Burlington-based Nordblom Development Co. and New York-based investment firm Rubenstein Partners, would be the first new office building in a section of the South End that has seen a flood of housing development in recent years — more than 1,000 apartments and condos within a few blocks.
The mid-rise, with 230,000 square feet of office space on eight floors above a three-story garage, would stand alongside and share a lobby with an existing office building next door at 1000 Washington St. that houses state agencies.
Photo Credit: The Real Reporter
177 Huntington moves to the sale block from Beacon Capital. The building anchors the First Church of Christ plaza and has become a destination for boutique Class A tenants.
From The Real Reporter:
Acquired under a 99-year ground lease almost four years ago, the 26-story, 206,625-sf building should yield “way over” $700 per sf by one account, possibly eclipsing $725 per sf by other sources.
Observers say they anticipate 177 Huntington Ave. will draw from a wide geography of heavy hitters…One factor likely mitigating the 177 Huntington Ave. mark in that area is the leasehold structure of ownership, a format certain funds are unable to pursue. Either way, it appears Beacon is in line for a hefty return on the asset.
1 Federal Street in Boston’s Financial District
1 Federal Street is headed for the sales block by Eastdil Secured. The building is expected to trade in excess of $682 per square foot.
According to Realert, “the 38-story tower is 98% occupied, with a weighted average remaining lease term of almost seven years. The largest tenant, law firm Morgan Lewis, occupies 301,000 sf on a lease that runs until 2023. Records-management company Iron Mountain is leasing 133,000 sf until 2024. Others tenants include Credit Suisse, J.P. Morgan, Oppenheimer & Co. and U.S. Bank.”
Additional information is available on realert.
Credit: The Real Reporter
Boston won’t be scaling up to the development heights of projects underway in NYC. Boston’s newest tower comes in at nearly half the height of New York’s Nordstrom Tower.
From The Real Reporter:
When comparing to New York’s major projects under development, Boston comes up very short with Millennium Tower as its tallest, versus Nordstrom Tower, by more than double its size. Nordstrom Tower (when complete) is set to be crowned the World’s tallest, towering in at 1,775 Feet, while Millennium will top off at 685 feet.
They all won’t happen in this cycle, but it will be interesting to watch the Boston skyline evolve as projects come out of the ground.
From Banker & Tradesman:
Three office towers totaling 113 stories and nearly 2.5 million square feet, already bearing the Boston Redevelopment Authority’s stamp of approval, are to be built near the MBTA’s Haymarket, North and South stations.
The transit tower trend ratchets up with Boston Properties’ latest vision of a 1.3-million-square-foot development at Back Bay station, including a 26-story office tower. And the BRA is getting into the high-rise act as it seeks an “iconic” redevelopment up to 700 feet for its defunct Financial District garage at 115 Federal St.
Midwood is on the move with a 59-story office tower in Downtown Crossing (DTX) which would surpass Millennium in height. The building would be a combination of residential and retail space.
According to an article on the BBJ, “Midwood originally proposed a 28-story tower on the site in 2008, but the project stalled due to the economic crash…The current iteration of the project is substantially larger than the original proposal. An architectural presentation Midwood will give at the city this week presents plans for a 419-unit, 59-story residential building spanning 605,000 square feet.”
You can more on the DTX tower on the BBJ.
According to our research office rents will continue to grow through 2017 within the greater Boston market. On top of that, construction costs continue to climb while tenant improvement dollar’s decline and rent abatement all but disappears.
From Banker & Tradesman:
Rents in Class A downtown office towers jumped 7.4 percent in 2015, with a nearly 4 percent jump in the last three months of the year, according to Lisa Strope, New England research director for JLL.
Leasing activity downtown leaped 18 percent during the fourth quarter.
The average rent for top-shelf office space in Boston ended 2015 at just under $61 a square foot, up from $52 at the end of 2013.
“Suddenly downtown is looking good to a lot of people,” Strope said.
The sausage parcel in the Seaport sells for $36M. Where is this?
According to the BBJ, “the 0.7-acre site at 399 Congress St. in Boston’s Seaport District…is a long, thinly shaped site — almost like a link of sausage — that’s sandwiched between the confluence of East Service Road, Congress Street and what’s now Boston Wharf Road in the Seaport.
You can read more about the Sausage Parcel site at 399 Congress on the Boston Business Journal, here.
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Seaport Office Space
Office rents continue Northward while vacancy works Southward in Boston’s office Market. We will continue to see rent growth through 2016 as tenants continue to demand more space.
According to Globest, “the strong job market is fueling tenant demand and positive space absorption in Boston and surrounding areas such as Cambridge and the Route 128 markets. The office vacancy rate for Greater Boston ended 2015 at 12.1%, virtually flat as compared to year’s-end 2014. The average vacancy rate for 2015 was 12.2%, the lowest rate since 2002. Class A asking rents in the region rose to $42.06-per-square-foot. Asking rents haven’t been that high since 2002, Transwestern reports.”
You can read the full article on its website.