BOSTON-Cassidy Turley has released its year-end MarketWatch research that tracks the performance of the commercial real estate market in Boston, Cambridge and the suburbs.
Downtown Boston performed well for the second consecutive year, with Q4 having brought the delivery of Vertex’s 1.1 million-square-foot facility at Fan Pier—positive absorption that was offset by the listing of Goodwin Procter’s space (400,000 square feet at 53 State St.) and PwC’s space (370,000 square feet at 125 High St.) in anticipation of the groundbreaking of their respective build-to-suits in the Seaport District.
At a total of 290,871 square feet, Boston ended 2013 with lower absorption than 12 months ago, but the number is deceptive, Cassidy Turley points out, because of Fan Pier and the listing of multiple large blocks of space, including Lexington Insurance‘s 460,000 square feet at 100 Summer St., as well as the previously mentioned offices.
As a result, availability ticked up 1.6%, while vacancy declined 50 basis points–a sign that even though footprints are shrinking, demand for space remains consistent. At 22.8%, class A availability in the Financial District is historically high, yet with vacancy at 12.6%, asking rents have risen 2.6% in the past 12 months.
The Seaport remains the hottest submarket in the city, at $52.92 per square foot, asking rents are only 2% lower than class A asking rents in Back Bay.
Meanwhile, 2013 brought no surprises in Cambridge—at 7.2%, vacancy remains tight, with Kendall Square holding onto its position as the top neighborhood. Office rents in East Cambridge soared another 9.3% this year. Twitter took space at 141 Portland St. while there is talk that Google might expand its offices.
In the suburbs, everything is for sale. Along Route 128, 20% of inventory was sold or put on the market, Sellers who can secure anchor tenants are disposing of their assets quickly—and their pricing bids are being met. In Burlington alone, more than 50% of the office inventory traded hands in 2013, from New England Executive Park to Burlington Woods.
In the west, renewals of large, anchor tenants continued while, in the north, leasing activity slowed down in the second half of the year. The latter market has exposure to government contracting agencies, Cassidy Turley notes.