Northeast Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Northeast United States.
Issue link: https://northeastrealestatebusiness.epubxp.com/i/632700
18 • January/February 2016 • Northeast Real Estate Business www.REBusinessOnline.com M A R K E T H I G H L I G H T: B O S T O N The last fve years have seen a lot of shuffing around for Boston's main- stay industries, with professional ser- vice frms moving to the Seaport and tech companies moving to Kendall Square. Although we've seen more new residential and commercial de- velopment than ever, there will al- ways be space limitations in Boston, which means there will always be more user demand than there is space on the market. The space left behind from tenants on the move will be eas- ily flled by the next wave of tenants — and the cycle continues. Oxford Properties' latest announce- ment of its acquisition of 222 Berkeley St. and 500 Boylston St. in the Back Bay is perhaps the best example of the trajectory model in Boston. And simi- lar to the media and fnance switch- eroo that Manhattan is experiencing (the media mecca is now downtown and FiDi is now midtown), media companies in Boston are now moving into the fnancial district and fnance frms are moving to the Seaport. Bos- ton Globe Media Partners is close to leasing 75,000 square feet of space at 53 State Street. The publishing compa- ny will take some of Goodwin Proct- er's block that will be vacated once the company relocates to the Seaport District. The newspaper is once again marketing its 670,000-square-foot headquarters in Dorchester. Another inevitable cycle repeating itself is a shift back to traditional offce environments, even for progressive companies in modern spaces. As em- ployees start working in some of the latest and greatest workplace strategy designs like benching, hoteling and total open foor plates, it turns out that these models are not being received as positively as expected. The necessity for at least 80/20 percent of private space for confdentiality purposes is becoming apparent and several com- panies are going back to the drawing board to reconfgure a more manage- able and functional ratio of open ver- sus closed spaces. One fundamental aspect of our business will most likely remain a constant: the core high-tech, health- care and education industries will continue drive the commercial real estate sector in Boston. Most of the press buzz for the city can be attrib- uted to biopharma due to its unique and intriguing developments — and the industry has seen 38 percent em- ployment growth rate since 2005. However, it is the high-tech sector that has paid nearly 20 percent of all wages in Massachusetts in the last de- cade, according to the Bureau of Labor Statistics. Finance and legal, once criti- cal industries to Boston's vitality, have lessened in impact year over year. And it is because of the strength in healthcare, education and high tech, that Boston will not experience any sort of drastic crash, but more of a lev- eling off. At most, we will see avail- ability rates move from super tight to slightly less tight, perhaps to 10 percent from 4 percent availability. The truth is we've had a frothy mar- ket for the past three years, hitting double digit rent growth year over year, particularly in core markets like the Seaport and Kendall Square. 2015 was a record-setting year for building trades and deal volume — with $5 billion trading hands. Of course, we will continue to feel some pain in the north and south suburban markets, but as the cycle continues, even those markets might see some more activity as the hot markets become fully satu- rated and cost savings become more appealing. Steve Woodworth Senior Managing Director, Savills Studley, Boston IT'S A GAME OF MUSICAL CHAIRS FOR BOSTON'S CORPORATE TENANTS FABCON IS IN THE BEER BUSINESS The beer makers of Ale Asylum, in Madison, Wisconsin were the toast of the town, but had hit the top end of their production capacity. With Fabcon's help, Ale Asylum now has the capacity to roll out the barrel like never before. ©2015 Fabcon Precast Learn more about Ale Asylum's growth story at fabconprecast.com/beer PRECAST WALL SYSTEMS - ENGINEERING - MANUFACTURING - INSTALLATION www.fabconprecast.com | (800) 727-4444 C E L E B R A T I N G F A B C O N P R E C A S T