On the whole, Greater Boston’s commercial real estate markets posted positive results in the first quarter. Net absorption was positive, vacancies continued to decline and rents are still climbing. Looking forward, we expect fundamentals to remain positive in the near term, but 2016 will be a pivotal year as macro headwinds may be on the horizon.
Here are some highlights from our Q1 2016 market reports:
- The Greater Boston office market kicked off 2016 on a positive note. Last year’s strong leasing activity helped to push quarterly net absorption above 1 million square feet, and metrowide vacancies fell below 12%. The first quarter of 2016 was marked by handful major lease transactions, including BNY Mellon, Putnam Investments, Optum and Kronos, but none was more newsworthy than GE’s announcement to relocate its corporate headquarters to the Seaport District.
- Coming off a strong fourth quarter, the Greater Boston industrial market continued to impress during the first three months of 2016. First-quarter net absorption totaled more than 900,000 square feet, which was almost solely driven by the Route 128 markets. Though a few large move-outs along Route 495 led to some negative net absorption, but overall vacancies breached 10% — representing a 150-basis-point decline from year-ago levels.
- The Greater Boston lab market posted another strong quarter with net absorption surpassing 600,000 square feet and vacancies reaching record lows, at just 3.3%. Cambridge is leading the charge as demand for space is outstripping supply by a wide margin and vacancies declined to just 2%. This scarcity of space has lead tenants to execute forward lease commitments, look outside of Cambridge (and even the premier suburban markets) for lab space and consider build-to-suit construction.