SEAPORT OFFICE •
(thousands)
SQUARE FEET
VACANCY & NET ABSORPTION
Despite ticking up by 70 basis points during the third quarter of 2018, office vacancies in the Seaport are hovering near the market’s five-year historical
700
16%
600
14%
500
12%
delivery of the first office tower at the Pier 4 development marked Boston
400
10%
Consulting Group’s relocation and consolidation from 53 State Street
300
8%
and One Beacon, and accounted for a large share of third-quarter net
200
6%
absorption in the Seaport. Cengage Learning also plans to relocate from
100
4%
0
2%
Channel Center to the new tower in mid-2019.
-100
0% 2013
2014
2015
2016
2017
NET ABSORPTION
2018
low at 7.1%. Construction continues to drive net absorption here. The
•
Over the next couple of quarters John Hancock Financial is moving it’s 1,000 Seaport employees back to the Back Bay and is in the process of
VACANCY
either selling or leasing out their 465,000 square foot building on Congress Street. Demand for office space in the Seaport is solid though, and major
CLASS A & B RENTS
office users in need of space downtown will likely take a hard look at this $80
property.
$70
•
$60 $50
Mendix and AKCEA Therapeutics moved into 22 Boston Wharf Road; bringing the newly-renovated office building to full occupancy.
$40
•
$30
During the first three quarters of 2018 asking rents jumped 11% and 7% for
$20
Class A and B space, respectively. While development has impacted lease
$10
rates in the Seaport’s Class A office market, tight market fundamentals have
$0 2015
2016
2017
CLASS A
benefited the area’s Class B landlords as well. At $54/SF in the third quarter,
2018
this market boasts the highest Class B rents in Downtown Boston.
CLASS B
FEATURED DEAL NOTABLE TRANSACTIONS
200 PIER FOUR BLVD BOSTON 372,372 SF
Living Proof, Inc
CommonWealth Partners acquired the recently completed phase II of the Pier 4 development
International Health Racquet and Sportsclub 0
10
20
in the Seaport. The 372,372-square-foot office
30
building sold for $450 million or more than
SQUARE FEET (thousands)
$1,200 per square foot. The cap rate on this transaction was just 4.2%. Boston Consulting Group occupies the majority of the building after recently relocating its headquarters.
TOTAL INVENTORY (SF)
UNDER CONSTRUCTION (SF)
DIRECT VACANT (SF)
SUBLEASE VACANT (SF)
TOTAL VACANCY RATE
Q3 NET ABSORPTION (SF)
YTD NET ABSORPTION (SF)
ASKING RENT ($/SF)
Class A
5,426,493
320,979
119,662
-
2.2%
337,473
970,592
$67.24
Class B
5,522,735
-
532,314
126,321
11.9%
(68,924)
21,000
$54.01
10,949,228
320,979
651,976
126,321
7.1%
268,549
991,592
$56.51
Total
303 CONGRESS STREET | BOSTON, MA 02210 | 617.457.3400 | HUNNEMANRE.COM
SEAPORT OFFICE
FINANCIAL DISTRICT
SOUTH STATION
SEAPORT
SOUTH END
SOUTH BOSTON
DIRECT VACANCY
SUBLEASE VACANCY
12-MONTH ABSORPTION
ASKING RENT
6.0%
1.2%
268,549
$56.51
LIZ BERTHELETTE
JOEY BIASI
Director of Research 617.457.3306
[email protected]
Research Analyst 617.457.3385
[email protected]
FINANCIAL DISTRICT OFFICE VACANCY & NET ABSORPTION
•
800
14%
third quarter of 2018. That said, vacancies remain near historic lows in
600
12%
Boston’s largest urban office market.
400
10%
200
(thousands)
SQUARE FEET
Flat absorption in the Financial District kept vacancy rates at 8.4% in the
8%
•
remained between $59 and $61 per square foot for 10 quarters. However,
0 6%
-200
Class B rents have increased by almost $5 per square foot over the same
4%
-400
time period, as companies seek value.
2%
-600 -800
0% 2013
2014
2015
2016
NET ABSORPTION
2017
2018
The market’s low volatility is also seen in Class A asking rents, which have
•
There were some large leases signed in the third quarter. Air Worldwide took 116,225 square feet at 500 Washington and Burns & Levinson bucked
VACANCY
the legal firm downsizing trend, moving to about 100,000 square feet at 125 Summer street. Puma continued the trend of “enterprise” clients leasing
CLASS A & B RENTS
coworking space with a 60,000 square foot lease at 33 Arch Street.
$70
•
$60
A pair of asset management companies led the way for move ins, with
$50
PanAgora moving into their 40,000 square foot space at One International
$40
Place and Acadian settling in to 16,000 square feet at 260 Franklin Street.
$30
•
$20
Boston firms continue to play musical chairs, resulting in some large, within-city moves. Putnam Investments moved into its new 250,000 square
$10
foot headquarters at 100 Federal Street. The finance giant left behind it’s
$0 2015
2016 CLASS A
2017
long term headquarters at One Post Office Square, which is undergoing
2018
renovations.
CLASS B
NOTABLE TRANSACTIONS
FEATURED DEAL
125 HIGH STREET BOSTON 102,969 SF
Morgan, Lewis & Bockius, LLP
In one of the largest leases of the third quarter,
Burns & Levinson
Burns & Levinson inked a deal for 102,969 square feet at 125 High Street in the Financial District.
Commonwealth Care
The law firm is planning to relocate from 125
Hogan Lovells
Summer Street, where the company has been located for several decades, during the summer
Lutron 0
500
100
150
of 2019.
200
SQUARE FEET (thousands)
TOTAL INVENTORY (SF)
UNDER CONSTRUCTION (SF)
DIRECT VACANT (SF)
SUBLEASE VACANT (SF)
TOTAL VACANCY RATE
Q3 NET ABSORPTION (SF)
YTD NET ABSORPTION (SF)
ASKING RENT ($/SF)
Class A
28,886,085
333,283
1,997,848
220,132
7.7%
(66,620)
78,090
$61.65
Class B
6,819,778
48,000
706,866
80,783
11.5%
49,532
(24,573)
$50.61
35,705,863
381,283
2,704,714
300,915
8.4%
(17,088)
53,517
$58.76
Total
303 CONGRESS STREET | BOSTON, MA 02210 | 617.457.3400 | HUNNEMANRE.COM
FINANCIAL DISTRICT OFFICE
NORTH STATION
FINANCIAL DISTRICT
BACK BAY SOUTH STATION
SEAPORT
DIRECT VACANCY
SUBLEASE VACANCY
12-MONTH ABSORPTION
ASKING RENT
7.6%
0.8%
(17,088)
$58.76
LIZ BERTHELETTE
JOEY BIASI
Director of Research 617.457.3306
[email protected]
Research Analyst 617.457.3385
[email protected]
BACK BAY OFFICE •
VACANCY & NET ABSORPTION
Driven by consistent positive net absorption, Back Bay continues to
14%
600
12%
in the Back Bay declined by a remarkable 300 basis points to 7.7% in the third quarter, bringing the submarket in line with the overall urban rate.
10%
400 (thousands)
SQUARE FEET
decrease its vacancy rate from the 2017 high. During the past year vacancies 800
8% 200
•
Finance, insurance, and legal services are facing consolidations. Liberty
6%
Mutual and John Hancock Financial represent two of the largest Back Bay
4%
office users right-sizing their operations. Growing tech companies, like
-200
2%
Wayfair, will help backfill some of this pace though.
-400
0%
0
2013
2014
2015
2016
2017
NET ABSORPTION
•
2018
Kirkland & Ellis moved into the neighborhood with 60,000 square feet of space at 200 Clarendon. The Boston Foundation also occupied their more
VACANCY
than 25,000-square-foot space at 75-81 Arlington Street. CLASS A & B RENTS
•
$80
Following the trend we are seeing across the urban submarkets, asking rents for Class B space in the Back Bay are becoming increasingly more
$70 $60
expensive. At the beginning of 2018, Class A assets held a more-than $23
$50
per square foot premium over Class B properties. As of the third quarter of
$40
2018, the premium has declined to just $17.24 per square foot.
$30
•
$20
On the investment sales side, 501 Boylston Street sold in August for $290.9 million dollars, or $956 per square foot. The building was almost
$10
completely occupied at the time of sale, with the major tenant being its
$0 2015
2016 CLASS A
2017
2018
newest; WeWork.
CLASS B
FEATURED DEAL NOTABLE TRANSACTIONS
501 BOYLSTON STREET BOSTON 610,000 SF
The Wing
During the third quarter, Norges Bank Investment Management acquired a partial interest (49.9%)
Xontogeny
in the 610,000-square-foot Class A office building. 0
5
10
The price tag for this partial interest transfer was
SQUARE FEET
$290.9 million or $956 per square foot. The seller,
(thousands)
TH Real Estate, retained a 50.1% interest in the property.
TOTAL INVENTORY (SF)
UNDER CONSTRUCTION (SF)
DIRECT VACANT (SF)
SUBLEASE VACANT (SF)
TOTAL VACANCY RATE
Q3 NET ABSORPTION (SF)
YTD NET ABSORPTION (SF)
ASKING RENT ($/SF)
Class A
12,817,324
-
953,101
58,431
7.9%
67,985
404,195
$69.46
Class B
1,223,107
-
62,523
10,385
6.0%
(1,759)
(11,827)
$52.22
14,040,431
-
1,105,624
68,816
7.7%
66,226
392,368
$68.40
Total
303 CONGRESS STREET | BOSTON, MA 02210 | 617.457.3400 | HUNNEMANRE.COM
BACK BAY OFFICE
NORTH STATION
FINANCIAL DISTRICT
SOUTH STATION
BACK BAY
KENMORE/ FENWAY
SOUTH END
DIRECT VACANCY
SUBLEASE VACANCY
12-MONTH ABSORPTION
ASKING RENT
7.2%
0.5%
66,226
$68.40
LIZ BERTHELETTE
JOEY BIASI
Director of Research 617.457.3306
[email protected]
Research Analyst 617.457.3385
[email protected]
128 WEST OFFICE 400
14%
200
12%
•
recent slide in occupied space. Rates remain elevated, however, as new deliveries have impacted market fundamentals.
8% -200 6% -400 -600 -800 2013
2014
2015
2016
NET ABSORPTION
2017
Vacancies in the Route 128 West office market remained essentially flat in the third quarter of 2018, as modest positive net absorption reversed the
10%
0 (thousands)
SQUARE FEET
VACANCY & NET ABSORPTION
•
Speculative construction in the Route 128 West submarket has pushed
4%
office vacancies up in the Class A market, which are sitting more than 100
2%
basis points above rates in the Class B market. This has led to outsized rent
0%
growth in this market’s Class B assets over the last several years.
2018
•
VACANCY
Cambridge Savings Bank led the way for newly signed leases, with plans to relocate and consolidate its back-office operations to 76,000 square
CLASS A & B RENTS
feet at 81 Wyman Street in Waltham while retaining its headquarters in
$50
Cambridge. Brigham and Women’s also announced a move from Brookline to Needham; signing a 47,000-square-foot lease at 254 Second Ave.
$40 $30
•
New construction in Greater Boston’s suburban office market is leasing up, albeit at a slower pace than in the Boston markets. In Waltham, two large
$20
users are slated to join Deciphera at the Post at 200 Smith Street and occupy $10
the remaining space in the building. Hilco Real Estate’s redevelopment of 152 Grove Street, also in Waltham, reached completion with Panasonic
$0 2015
2016
2017
CLASS A
2018
leasing 22,356 square feet of office space in the building.
CLASS B
FEATURED DEAL
NOTABLE TRANSACTIONS
254 SECOND AVENUE NEEDHAM 47,000 SF
Cambridge Savings Bank Brigham and Women’s Hospital
Hunneman recently represented the landlord,
Morgan Stanley
foot lease with Brigham and Women’s Physicians
Grander Capital Partners, in a 47,000-squareOrganization at 254 Second Avenue in Needham.
Markforged
The building is currently undergoing some major renovations with the addition of new amenities
Appellis Pharmaceuticals 0
10
20
30
40
50
60
70
and updated common areas.
80
SQUARE FEET (thousands)
TOTAL INVENTORY (SF)
UNDER CONSTRUCTION (SF)
DIRECT VACANT (SF)
SUBLEASE VACANT (SF)
TOTAL VACANCY RATE
Q3 NET ABSORPTION (SF)
YTD NET ABSORPTION (SF)
ASKING RENT ($/SF)
Class A
13,171,386
639,442
1,708,865
169,116
14.3%
6,324
(145,629)
$42.12
Class B
10,009,851
25,800
1,272,741
42,371
13.1%
65,712
(134,130)
$34.32
Total
23,181,237
665,242
2,981,606
211,487
13.8%
72,036
(279,759)
$38.79
303 CONGRESS STREET | BOSTON, MA 02210 | 617.457.3400 | HUNNEMANRE.COM
128 WEST OFFICE
128 WEST
DIRECT VACANCY
SUBLEASE VACANCY
12-MONTH ABSORPTION
ASKING RENT
12.9%
0.9%
72,036
$38.79
LIZ BERTHELETTE
JOEY BIASI
Director of Research 617.457.3306
[email protected]
Research Analyst 617.457.3385
[email protected]
NORTH OFFICE •
VACANCY & NET ABSORPTION 600
19%
overall vacancy rates relatively flat in 2018 for the North office markets. That
400
18%
said, rates are tighter in the Route 128 North and Northwest submarkets
18%
as tenant demand continue to favor locations within or close to the Route
17%
128 Loop.
(thousands)
200 SQUARE FEET
More than 138,000 square feet of positive absorption year-to-date has kept
0
17% -200
16%
-400
•
Rent growth has been rather pedestrian across the North office markets,
16%
with average asking rents increasing by 3.4% on a year-over-year basis.
-600
15%
Growth has also been waning in more recent quarters, with the exception
-800
15% 2013
2014
2015
2016
NET ABSORPTION
2017
of the Route 128 Northwest submarket where lease rates expanded by 1.3%
2018
quarter-over-quarter.
VACANCY
•
CLASS A & B RENTS
In the third quarter, eSginal, SAS Institute and Schneider Electric vacated large blocks of space in the North markets, while L3 Communications, First
$35
Light Biosciences and C-4 Analytics took occupancy of new space.
$30 $25
•
$20
Office investors are venturing further into the suburbs. Carter Validus sold
$15
15 Shattuck Road in Andover for $15 million or $162 per square foot to
$10
Menlo Equities. Fitzgerald Tile sold 120 Commerce Way in Woburn to Cabot,
$5
Cabot & Forbes and Toll Brothers for $12.4 million or $303 per square foot.
$0 2015
2016
2017
However, the property will demolished for a residential development.
2018
ROUTE 128 NORTH
ROUTE 128 NORTHWEST
ROUTE 495 NORTH
ROUTE 495 NORTHEAST
FEATURED DEAL
269-271 MILL STREET CHELMSFORD 268,000 SF
NOTABLE TRANSACTIONS
In an owner-user transaction, Boston Properties
Sakon
sold the 145,464-square-foot 269 Mill Street and 122,536-square-foot 271 Mill Street in
Lifelinks, Inc
Chelmsford for $35.3 million or $132 per square C-4 Analytics
foot. The buyer is long-time tenant Zoll Medical Corporation, and had leased space in both
Infineon 0
20
40
60
80
100
120
buildings prior to the sale transaction.
140
SQUARE FEET (thousands)
TOTAL INVENTORY (SF)
UNDER CONSTRUCTION (SF)
DIRECT VACANT (SF)
SUBLEASE VACANT (SF)
TOTAL VACANCY RATE
Q3 NET ABSORPTION (SF)
YTD NET ABSORPTION (SF)
ASKING RENT ($/SF)
Route 128 North
13,790,737
175,000
1,476,237
57,267
11.1%
26,069
(16,509)
$22.78
Route 128 Northwest
13,796,885
-
1,728,236
222,639
14.1%
76,905
(102,253)
$31.49
Route 495 North
13,194,568
-
3,142,902
119,716
24.7%
129,313
234,763
$19.51
Route 495 Northeast
7,939,842
-
1,424,497
78,396
18.9%
(69,050)
22,383
$20.17
48,722,032
175,000
7,771,872
478,018
16.9%
163,237
138,394
$22.91
Total
303 CONGRESS STREET | BOSTON, MA 02210 | 617.457.3400 | HUNNEMANRE.COM
NORTH OFFICE
495 NORTH EAST
128 NORTH
495 NORTH
128 NORTH WEST
DIRECT VACANCY
SUBLEASE VACANCY
12-MONTH ABSORPTION
ASKING RENT
16.0%
1.0 %
163,237
$22.91
LIZ BERTHELETTE
JOEY BIASI
Director of Research 617.457.3306
[email protected]
Research Analyst 617.457.3385
[email protected]
NORTH INDUSTRIAL •
VACANCY & NET ABSORPTION 1,500
long way from its 2013 high water mark of 14.5%, overall rates have been
16%
hovering near 9% for the last nine quarters. That being said, a strong
14%
(thousands)
SQUARE FEET
1,000 500
While the North industrial markets’ vacancy rate has certainly come a
12%
showing in the third quarter resulted in more than 400,000 square feet of
10%
positive net absorption across the North industrial markets.
8% 0
6%
-500 -1,000 2013
2014
2015
2016
NET ABSORPTION
2017
•
Tenant migration remains active in the North industrial markets. L3
4%
Communications vacated 10 Commerce Way in Woburn in a relocation
2%
to Tewksbury. Reportedly, there is already a tenant lined up to backfill
0%
the firm’s space in Woburn. Joule Unlimited Technologies vacated 53,000
2018
square feet at 18 Crosby Drive in Bedford as well in the third quarter.
VACANCY
• CLASS A & B RENTS
The marijuana industry continues to make waves in the local market as well. In the third quarter, Happy Valley Ventures acquired the former Greencore
$30
Group food manufacturing facility at 2 Opportunity Way in Newburyport
$25
for $8.6 million or $100 per square foot. The firms plans to cultivate and
$20
manufacture marijuana at the property. Happy Ventures also has two other
$15
production plants in the works at Gloucester’s Blackburn Industrial Park.
$10
Sanctuary Medicinals recently opened a 24,000-square-foot facility at 234
$5
Taylor Road in Littleton as well.
$0 2015
2016
2017
2018
ROUTE 128 NORTH
ROUTE 128 NORTHWEST
ROUTE 495 NORTH
ROUTE 495 NORTHEAST
FEATURED DEAL
100-110 FORDHAM ROAD WILMINGTON 304,314 SF
NOTABLE TRANSACTIONS
Carlisle Capital Corporation purchased a four-
Abiomed
property industrial and flex portfolio at 100-110 Fordham Road in Wilmington from KS Partners.
Fusion Worldwide
The sales price topped $27 million or $89 per square foot. The cap rate on this transaction
SPS New England 0
5
10
15
20
was $4.9%. At the time of sale, Building D was
25
SQUARE FEET
completely vacant (100,195 square feet).
(thousands)
TOTAL INVENTORY (SF)
UNDER CONSTRUCTION (SF)
DIRECT VACANT (SF)
SUBLEASE VACANT (SF)
TOTAL VACANCY RATE
Q3 NET ABSORPTION (SF)
YTD NET ABSORPTION (SF)
ASKING RENT ($/SF)
Route 128 North
28,796,269
-
1,645,084
48,186
5.9%
5,1740
100,840
$9.85
Route 128 Northwest
3,887,608
-
175,411
29,776
5.3%
14,194
6,079
$24.06
Route 495 North
20,973,433
385,000
2,546,440
8,049
12.2%
18,093
(42,762)
$9.44
Route 495 Northeast
12,260,473
175,000
1,242,488
85,414
10.8%
319,894
449,676
$7.55
Total
65,917,783
560,000
5,609,423
171,425
8.8%
403,921
513,833
$9.60
303 CONGRESS STREET | BOSTON, MA 02210 | 617.457.3400 | HUNNEMANRE.COM
NORTH INDUSTRIAL
495 NORTH EAST
128 NORTH
495 NORTH
128 NORTH WEST
DIRECT VACANCY
SUBLEASE VACANCY
12-MONTH ABSORPTION
ASKING RENT
8.5%
0.3%
403,921
$9.60
LIZ BERTHELETTE
JOEY BIASI
Director of Research 617.457.3306
[email protected]
Research Analyst 617.457.3385
[email protected]
SOUTH OFFICE VACANCY & NET ABSORPTION 20%
600
•
Reebok’s relocation to Seaport. The vacancy rate remains elevated well
400
(thousands)
SQUARE FEET
above 14% and year-to-date net absorption is sitting at negative 685,000
15%
200
The South office markets have not quite found their footing following
square feet as of the third quarter. On a positive note, third-quarter net
0
absorption neared 85,000 square feet and vacancies were able to decline
10%
-200
by 40 basis points over the quarter. Collegium Pharmaceuticals’ relocation
-400
5%
to 100 Technology Center Drive in Stoughton accounted for the lion’s share
-600
of this activity.
-800
0% 2013
2014
2015
2016
NET ABSORPTION
2017
2018
•
VACANCY
On the leasing front, activity was brisk in the Quincy-Braintree micromarket during the third quarter of 2018. ThriveHive renewed their 40,000-squarefoot lease at 108 Myrtle Street in Qunicy and Blumshapiro plans to expand
CLASS A & B RENTS
into 22,742 square feet at 4 Batterymarch Park also in Quincy. The Boston
$30
Herald is also expected to relocate their offices from Boston to roughly
$25
13,000 square feet at 100 Grossman Drive by mid-December.
$20
•
$15
Asking rents in both South office submarkets are leveling out. The rapid increase in rents at the beginning of 2018 represents Reebok’s former
$10
Canton campus coming back on line. Asking rents for the 580,000 square
$5
feet of available office space are in the low-$30 per square foot range,
$0 2015
2016
2017
ROUTE 128 SOUTH
pushing the asking rents for the entire Route 128 South submarket to $25
2018
from $22 per square foot.
ROUTE 495 SOUTH
NOTABLE TRANSACTIONS
FEATURED DEAL
825 WASHINGTON STREET NORWOOD 92,400 SF
Shields Health Solutions
The largest office sale in the South markets
Keches Law
was a medical office building in Norwood. The 0
10
20
30
40
Guild Medical Center, at 825 Washington Street,
SQUARE FEET (thousands)
changed hands for $23.5 million or $254 per square foot. Thor Equities was the buyer in the transaction while Grander Capital Partners was the seller.
TOTAL INVENTORY (SF)
UNDER CONSTRUCTION (SF)
DIRECT VACANT (SF)
SUBLEASE VACANT (SF)
TOTAL VACANCY RATE
Q3 NET ABSORPTION (SF)
YTD NET ABSORPTION (SF)
ASKING RENT ($/SF)
Route 128 South
16,156,452
61,702
2,104,446
121,146
13.8%
24,723
(667,036)
$25.57
Route 495 South
3,332,907
-
620,450
4,788
18.8%
59,750
(18,531)
$19.49
19,489,359
61,702
2,724,896
125,934
14.6%
84,473
(685,567)
$24.18
Total
303 CONGRESS STREET | BOSTON, MA 02210 | 617.457.3400 | HUNNEMANRE.COM
SOUTH OFFICE
128 SOUTH
495 SOUTH
DIRECT VACANCY
SUBLEASE VACANCY
12-MONTH ABSORPTION
ASKING RENT
14.0%
0.6%
84,473
$24.18
LIZ BERTHELETTE
JOEY BIASI
Director of Research 617.457.3306
[email protected]
Research Analyst 617.457.3385
[email protected]
SOUTH INDUSTRIAL VACANCY & NET ABSORPTION
• 14%
1,500
submarket, had a very strong showing in the third quarter. Major renewals
12%
were inked by Essendant Co. and American Tire Distributors, Inc. while
1,000
(thousands)
SQUARE FEET
10% 500
move-ins from Ocean Spray, Anixter and Roadtex drove net absorption.
8%
As a result, vacancies ended the third quarter at just 7.2% in the South
6%
0
The metro’s South industrial markets, particularly the Route 495 South
industrial markets.
4% -500
2%
•
Industrial Park in Taunton, and plans to build a 100,000-square-foot
0%
-1,000 2013
2014
2015
2016
2017
NET ABSORPTION
Rhino Capital Advisors acquired an 11.3-acre parcel in the Myles Standish
2018
manufacturing facility for NN, Inc. Moreover, with the groundbreaking on
VACANCY
Condyne’s new project in Norton, more than 60% of the metro’s current construction pipeline is located in the South.
CLASS A & B RENTS
•
Investors have been active in the South industrial markets. Distribution Services of America divested a 134,680-square-foot industrial asset at 208
$8
North Street in Foxboro. The Kraft Group purchased the property for $18
$6
million or $134 per square foot. Wheelock Street Capital acquired two Flex/R&D buildings in Canton and Foxboro during the third quarter as well.
$4
$2
•
Average asking rents have been steadily rising here; ending the third quarter at $6.83 per square foot across the South markets. Over the last four years,
$0 2015
2016
2017
ROUTE 128 SOUTH
lease rates increased by 18.5%, with outsized gains occurring in the Route
2018
495 South submarket.
ROUTE 495 SOUTH
FEATURED DEAL
NOTABLE TRANSACTIONS
FLEX PORTFOLIO CANTON/FOXBORO 123,145 SF
Fidelity Information Services
In the third quarter Wheelock Street Capital, in a joint venture with The Seyon Group, acquired
NN, Inc
a two-property flex portfolio from Park Square KBF Contracting
Realty for $19.75 million or $160 per square foot. 0
20
40
60
80
100
120
50 Shawmut Road in Canton was fully leased to
SQUARE FEET
Sanofi while 25 Forbes Boulevard in Foxboro was
(thousands)
also fully leased to multiple tenants at the time of sale. TOTAL INVENTORY (SF)
UNDER CONSTRUCTION (SF)
DIRECT VACANT (SF)
SUBLEASE VACANT (SF)
TOTAL VACANCY RATE
Q3 NET ABSORPTION (SF)
YTD NET ABSORPTION (SF)
ASKING RENT ($/SF)
Route 128 South
39,574,304
300,000
2,963,968
26,540
7.6%
(11,099)
(73,028)
$7.26
Route 495 South
32,801,082
1,222,731
2,221,450
6,100
6.8%
383,625
715,505
$6.27
Total
72,375,386
1,522,731
5,185,418
32,640
7.2%
372,526
642,477
$6.83
303 CONGRESS STREET | BOSTON, MA 02210 | 617.457.3400 | HUNNEMANRE.COM
SOUTH INDUSTRIAL
128 SOUTH
495 SOUTH
DIRECT VACANCY
SUBLEASE VACANCY
12-MONTH ABSORPTION
ASKING RENT
7.2%
0.1%
372,526
$6.83
LIZ BERTHELETTE
JOEY BIASI
Director of Research 617.457.3306
[email protected]
Research Analyst 617.457.3385
[email protected]
WEST OFFICE
(thousands)
SQUARE FEET
VACANCY & NET ABSORPTION 600
25%
400
20%
200
15%
0
10%
•
Four consecutive quarters of negative absorption have pushed vacancies in the West office markets up by 160 basis points since 2017. Move-outs from Unidesk Corp. and Intranet drove much of the third-quarter activity. That said, rates remain well below their 2013 peak of 23%.
•
West office markets. Both Leidos and CardioFocus executed renewals on
5%
-200 -400
their roughly 20,000 square foot spaces in Framingham and Marlborough, respectively. Hologic also renewed its 216,000-square-foot lease at 250
0% 2013
2014
2015
2016
2017
NET ABSORPTION
Renewals dominate the leasing landscape during the third quarter in the
2018
Campus Dirve in Marlborough while Applause App Quality Inc. renewed its
VACANCY
27,813-square-foot lease at 100 Pennsylvanie Avenue in Framingham.
CLASS A & B RENTS
•
Office space in the Framingham-Natick has maintained a roughly $4 per-
$28
square foot premium over office space in the Route 495 West submarket
$24
since the beginning of 2015. While this gap remains, average asking rents
$20
in the Route 495 West submarket surpassed the $20 per-square-foot barrier
$16
last year and have continued a slow, steady pattern of growth.
$12
•
$8
In the largest deal of the quarter, KS Partners acquired the 192,248-squarefoot 293 Boston Post Road West in Marlborough from Lincoln Property
$4
Company and Realty Financial Partners for $16.4 million or roughly $85 per
$0 2015
2016
2017
square foot. The cap rate on this transaction was 6.05%. The property was
2018
75% occupied at the time of sale.
ROUTE 495 WEST
FRAMINGHAM/NATICK
FEATURED DEAL
NOTABLE TRANSACTIONS
250 CAMPUS DRIVE MARLBOROUGH 216,218 SF
Hologic
In the largest transaction of the third quarter, Exagrid Systems
Hologic renewed its lease at 250 Campus Drive in Marlborough. The medical device company
Applause App 0
50
100
150
200
occupies the entirety of the 216,218-square-foot
250
office building.
SQUARE FEET (thousands)
TOTAL INVENTORY (SF)
UNDER CONSTRUCTION (SF)
DIRECT VACANT (SF)
SUBLEASE VACANT (SF)
TOTAL VACANCY RATE
Q3 NET ABSORPTION (SF)
YTD NET ABSORPTION (SF)
ASKING RENT ($/SF)
Framingham-Natick
4,630,781
-
703,279
41,957
16.1%
54,240
(138,988)
$24.93
Route 495 West
11,183,798
-
1,877,121
54,576
17.3%
(78,709)
(243,996)
$20.40
Total
15,814,579
-
2,580,400
96,533
16.9%
(24,469)
(382,984)
$21.63
303 CONGRESS STREET | BOSTON, MA 02210 | 617.457.3400 | HUNNEMANRE.COM
WEST OFFICE
495 WEST FRAMINGHAM/ NATICK
DIRECT VACANCY
SUBLEASE VACANCY
12-MONTH ABSORPTION
ASKING RENT
16.3%
0.6%
(24,469)
$21.63
LIZ BERTHELETTE
JOEY BIASI
Director of Research 617.457.3306
[email protected]
Research Analyst 617.457.3385
[email protected]
WEST INDUSTRIAL VACANCY & NET ABSORPTION
(thousands)
SQUARE FEET
•
Vacancies in the West Industrial markets ended the third quarter at just
300
12%
200
10%
slightly negative for the quarter, as Lonza Biologics put 64,000 square feet
100
8%
on the market in Hopkinton. Year-to-date absorption remains healthy and
0
6%
overall fundamentals are positive.
-100
4%
-200
2%
Sanofi Genzyme and Replimune are expanding their biomanufacturing
-300
0%
operations in Framingham, while Repligen recently leased space at 111
2013
2014
2015
2016
2017
NET ABSORPTION
4.4%, which are the lowest rates in the metro area. Net absorption was
•
2018
This region is gaining traction as a life science manufacturing hub. Both
Locke Drive in Marlborough.
VACANCY
•
Industrial rents in the West markets have continued their ascent, and now are 13% higher than they were just two years ago. At $9.16 per square foot
CLASS A & B RENTS
in the third quarter, lease rates are just below the metrowide average of $10
$9.46 per square foot.
$8
•
A handful of assets changed hands in the third quarter in the West Industrial markets. R.J. Kelly purchased the 64,200-square-foot warehouse
$6
building at 201 Flanders in Westborough from DSN Realty Trust for $4.9
$4
million or $76 per square foot. The buyer plans to redevelop the property $2
into a self-storage facility. Six Capital also purchased 190 Fountain Street in Framingham for $3.55 million or $109 per square feet. The cap rate on this
$0 2015
2016
2017
2018
transaction was 10%.
ROUTE 495 WEST
FRAMINGHAM/NATICK
FEATURED DEAL
FLEX PORTFOLIO MARLBOROUGH 135,084 SF
NOTABLE TRANSACTIONS Imperia Engineering Partners
In the third quarter, Calare Properties, Inc. 0
5
sold two flex buildings in Marlborough to True
10
Associates. The assets, at 261 Cedar Hill Street
SQUARE FEET (thousands)
and 753 Forest Street, totaled 135,084 square feet in size. The sale price was $18.1 million or $134 per square foot, and the cap rate on this transaction was 7.3%.
TOTAL INVENTORY (SF)
UNDER CONSTRUCTION (SF)
DIRECT VACANT (SF)
SUBLEASE VACANT (SF)
TOTAL VACANCY RATE
Q3 NET ABSORPTION (SF)
YTD NET ABSORPTION (SF)
ASKING RENT ($/SF)
Framingham-Natick
3,213,188
-
141,657
-
4.4%
53,545
40,419
$8.42
Route 495 West
15,121,626
220,106
660,414
10,343
4.4%
(73,171)
178,447
$9.32
Total
18,334,814
220,106
802,071
10,343
4.4%
(19,626)
218,866
$9.16
303 CONGRESS STREET | BOSTON, MA 02210 | 617.457.3400 | HUNNEMANRE.COM
WEST INDUSTRIAL
495 WEST FRAMINGHAM/ NATICK
DIRECT VACANCY
SUBLEASE VACANCY
12-MONTH ABSORPTION
ASKING RENT
4.4%
0.1%
(19,262)
$9.16
LIZ BERTHELETTE
JOEY BIASI
Director of Research 617.457.3306
[email protected]
Research Analyst 617.457.3385
[email protected]
