The Boston office market itself is a text book for the office market of the 21st century…the city of Boston will have its fourth straight year of over 1 million s/f of absorption and has a 7.2% vacancy rate.
Cambridge is a story unto itself. This is a 23.7 million s/f market with a 3.8% office vacancy and 3.0% lab vacancy. The market is completely out of space.
The E. Cambridge office market will continue to grow with a 454,000 square-foot project from Boston Properties. Currently that market is just under 12M Square-feet of Class A project with vacancy under 5%.
According to the Boston Globe, “the Cambridge Planning Board next month will consider Boston Properties’ designs for a 454,000 square-foot, 19-story, office building at 145 Broadway. It’s the first phase of nearly 1 million square feet of new development that Boston Properties is planning on land it owns along Broadway and Binney Street in the booming biotech district. Later phases include more office space and a large apartment and condo building that would reach as high as 34 stories.”
The Commonwealth of Massachusetts packs a powerful punch when you combined education and innovation. Our state is number one in both of those categories, which is why we are a hotbed of new and expanding business across the state.
According to Bloomberg, “the Boston area’s Route 128 eked out a victory over Silicon Valley, as Bloomberg’s ranking of the most innovative states in the U.S. illustrates how universities can juice local economies…The Massachusetts Institute of Technology, Behravesh’s alma mater, is one such school that’s provided a ripple effect for the local economy…MIT graduates have produced around 400 startup businesses over the past few decades.”
Greater Boston’s life sciences rental rates have climbed 7.4 percent this year to reach an average rate of $47.40 per square foot, outstripping other top markets including Raleigh/Durham, North Carolina (up 12.4 percent year-over-year to $19 per square foot); San Francisco (16.9 percent, $37.30); San Diego (15.5 percent, $29.90); New York/New Jersey (8.3 percent, $24); and Los Angeles (4.9 percent, $30.70)…In Cambridge specifically, the average lab rent is $51.60 per square foot, the report said. The report also said tenants are currently on the hunt for around 1.3 million square feet of space in the city.
Low-rise and Class B offices are now commanding rents in the mid- to upper $40s range, while high-rise rents are reaching well past the $90 per square foot range, according to second-quarter research from commercial real estate services firm DTZ. Class B office rents are up 21 percent from last year in the Financial District, 12 percent in the North Station region and 20 percent in South Station, DTZ said.
“It’s also worth noting that nearly 25 percent of Boston’s office inventory has traded hands in the past 12 months,” the research report said. Meanwhile, Cambridge also maintained its post as the strongest real estate market in Massachusetts, with $2.2 billion in sales activity. That’s more than half of the overall $4 billion in total sales volume so far this year, according to recently released second-quarter research from JLL..Direct average rents rose more than 5 percent year-over-year in nine out of 12 of Boston’s submarkets, topping out with 16.3 percent growth in East Cambridge.
One Broadway in Kendall Square (click for property details)
Fewer options exist on the Boston office market, and what is available is more expensive then previous quarters. Combined with fewer concessions offered by landlords, local tenants are feeling the pinch.
Boston’s office market is hopping, according to reports issued by real estate brokerages Transwestern and Jones Lang LaSalle. Driven by strong employment gains and growing companies in need of additional space, rents are rising all across Greater Boston, up 7.6 percent in the last 12 months. Throughout Cambridge, there are just three vacant office spaces of 20,000 square feet or more on the market, and rents in Kendall Square are averaging above $70 per square foot. Along Route 128, vacancy rates are at record lows, while office rents along Interstate 495 are at seven-year highs.
Mass Innovation Labs said Monday that it was opening an “accelerated commercialization space” for companies trying to bring their drugs and devices to market. There also are specialized services available in-house, such as help setting up research contracts and an animal testing and scientific support area run by Charles River Laboratories…The three-story space hosts 10 suites containing a mix of lab and office space ranging from 2,900 to 18,000 square feet. It is backed by Breed’s Hill Capital, a Charlestown firm.
Boston office rents continue to rise, and are expected to climb through 2017. What can you do to hedge your risk against leasing in the top of the market? Understand what you need and engage an advisor.
The BBJ notes, “Boston can expect its asking rental rate increase to average 10.1 percent per year during that timeframe…The office market in Boston’s central business district averaged a $46.60 per-square-foot rental rate last year…[with estimates for] those rates to increase to $52.83 by 2015, $59.48 by 2016 and $62.09 by 2017.”
You can read the complete article on the Boston Business Journal, here.
April fools isn’t only for the water sprayer at the kitchen sink. Some of the team at Endeavour Partners in Kendall Square were taken back when they arrived at their office on April 1st.
According to The Boston Globe, an elaborate April Fools’ Day prank was achieved by the office assistants and company chief executive Michael A.M. Davies; “more than a dozen computers and phones were replaced by typewriters, notepads, and rotary phones. Old records and copies of Life magazine were placed around the office, along with a bottle of whiskey for good measure…Neel Desai, an associate consultant, said the gag was indicative of the office culture at the company.”
According to a BBJ article, “Amazon has an entire floor in its Kendall Square office dedicated to teams working on the Echo. The company has leased six floors at its 101 Main St. office in Cambridge with enough room for up to 800 employees.”
101 Cambridge Street is a 341,830 square foot 18 story building owned by RREEF. Some of the tenants according to CoStar include: