Friday, June 22, 2012, 11:20am
The commercial real estate market in Greater Boston continues to show improvement, according to a new report from Cushman Wakefield in Boston.
Mid-year statistics reflect continued improving fundamentals in most markets, the report indicates. Vacancy rates in the second quarter fell in the Financial District and continue to hover near equilibrium in the already tight Back Bay submarket.
Boston’s suburban markets, driven by strong occupier demand in both leasing and sales, also showed signs of improvement in the first half of the year, with leasing activity at 3.2 million square feet so far this year.
“Boston’s economic expansion and job growth, combined with powerful demand for urban life-style communities, are driving the recovery in Boston’s real estate markets,” Robert Griffin Jr., president of Cushman Wakefield’s New England region, said in a statement. “Renovation and redevelopment in the Fenway, Cambridge and Seaport, together with an extremely tight market in the Back Bay are underpinning Boston’s status as a global gateway city. For investors, demand is extremely hot for well-leased office, industrial, retail, multifamily and medical/academic. We are also beginning to see significant signs of life in the suburbs, which is very promising.”
The vacancy rate in Boston’s overall Central Business District (CBD) was flat for the quarter at 12.6 percent; however, the Financial District saw a quarterly vacancy rate decline of 0.4 percentage points. Both the Financial District and the Seaport experienced combined positive absorption year-to-date of nearly 300,000 square feet, with leasing activity for the overall CBD totaling nearly 2 million square feet for the first half.
The big story in the suburbs at mid-year has been powerful occupier activity in both leasing and sales, according to Cushman Wakefield.
This week, Green Mountain Coffee Roasters Inc. leased 424,000 square feet on South Avenue in Burlington for its Massachusetts-based Keurig business unit. Other notable transactions this year include the sale of Corporate Crossing at 495, a 716,000-square-foot corporate campus in Marlborough, to TJX Co. for $62.5 million, as well as the 328,000-square-foot office lease renewal with EMC at 174-176 Middlesex Turnpike in Bedford. In addition, most suburban markets posted solid declines in vacancy at mid-year.
In Cambridge, strong demand continues to drive the market with low vacancy rates and 1.7 million square feet of construction now underway. The Massachusetts Avenue / Harvard Square office submarket finished the second quarter with the area’s lowest vacancy rate, down 0.2 percentage points to 2.5 percent. In Kendall Square/East Cambridge, the office vacancy rate dropped 0.8 percentage points to 6.4 percent, finishing the quarter with the third lowest rate in the area (The Back Bay ended the quarter with the area’s second lowest vacancy rate at 5.7 percent). Overall laboratory space in the Cambridge market experienced a 2.9 percentage point decline in its vacancy to 15.4 percent.
Cushman Wakefield handled two large commercial real estate deals so far this year — the $610 million sale of 100 Federal St. in the city’s financial district and the Davenport Building.