The Boston area real estate market continues to offer investors a relative bargain compared with other markets when you consider rents, office space availability, workforce, employment numbers, and new construction.
Commercial Observer lists out the top ten reasons why investors should keep their eye on the area:
Office vacancy is the lowest it’s been since before the Great Recession.
Office asking rents are the highest they’ve been since before the Great Recession.
These higher rents include even Class B space.
Job growth in the Boston region is exploding—just look at GE.
And look at the biotechnology industry.
Boston’s office landlords are upgrading existing spaces and adding relatively little new inventory.
The hotel market is one of the nation’s hottest—and tightest.
As for Boston’s multifamily market, it’s nearly impossible to find one with better fundamentals.
Office fit-ups are more in-line to accommodate an employee as a whole person than a worker. The notion that you can bring your dog, grab a beer and play ping-pong doesn’t sound like a workplace or a bar, but rather a gathering at a friend’s house. Architects and landlords have embraced this and are trying to retrofit existing buildings, while incorporating this approach into new construction.
Another illustration of this trend is HubSpot’s new Cambridge office space. According to Bizjournals, “the expansion at 2 Canal is a complement to the company’s existing headquarters at 25 First St. in Cambridge. Dozens of employees are moving into the new office this week, including HubSpot’s product team, business operations and product marketing. That will free up room for renovation and expansion projects at the company’s 118,000-square-foot headquarters at 25 First St., where they recently signed a lease extension to occupy most of the building in the coming years.”
MIT has presented their update plan for Kendall Square in Cambridge. Kendal Square is currently one of the hottest office markets nationally with record rents for Class A & B office space. Major tenants include Microsoft and Google.
The Kendall Square Initiative aims to create a vibrant mixed-use district featuring six new buildings on what are now MIT-owned parking lots in the East Campus/Kendall Square area, including three buildings for research and development, two for housing, and one for retail and office space. The plan will produce approximately 250 net new housing units for graduate students and approximately 290 new housing units for market use, more than 100,000 square feet of new and repositioned ground-floor retail, and nearly three acres of new and repurposed open spaces — in addition to providing research and development space in support of Kendall Square’s growing innovation district.
The Initiative was developed as a result of approximately seven years of internal and external dialogue. The Cambridge City Council approved new zoning for MIT’s properties in the East Campus/Kendall Square area in 2013, laying the foundation for the advancement of the mixed-use proposal.
Harvard grads are more likely to choose startups to begin their career rather than the traditional path of large corporations.
According to the BBJ, “one in five MBA students in Harvard Business School’s 2015 graduating class have entered the technology sector, the highest level since 2000 — that is, the year the dot-com bubble was about to implode.”
The Boston Business Journal article continues, noting “the newest crop of graduates also possessed a more entrepreneurial streak than their predecessors. Nine percent of graduates accepted offers from startup companies, nearly double the percentage from the previous year, according to statistics recently published by HBS. Another 9 percent started their own businesses, up from 8 percent in 2014. There were 915 students in HBS’s 2015 graduating class.”
Changes in real estate keep coming, now MIT is elaborating on its plans for 1 Main Street in Kendall.
According to the Boston Globe, “University officials this week presented additional details of their plan for a reimagined Main Street, with new towers, wider sidewalks, welcoming open spaces, and clear signals to visitors that they have landed at MIT and in Kendall Square. The presentation before the city’s Planning Board on Tuesday night provided an overview of the $1.2 billion redevelopment project, which calls for converting six parking lots into offices, research space, hundreds of units of housing, and more than 100,000 square feet of retail. The six new buildings near Main would rise up to 300 feet tall.” The Globe article further explains, “City planners were largely supportive of MIT’s plan, though in a memo they expressed concern about “the scale and bulk” of some of the proposed buildings, warning that they might overwhelm pedestrians. Several members of the Planning Board agreed that the buildings appeared too imposing; some also called for more middle-class housing. But the board did certify that the plan met zoning and design guidelines.”