In the office market, the suburbs accounted for the majority of the markets more-than 300,000 square feet of positive absorption. The lab market, particularly Kendall Square, remains tight with vacancies nearing 3% metrowide. Fundamentals continue to improve in the industrial market as well with vacancies reaching new lows.
The new year has brought continued uncertainty in the marketplace. However, many signs are still pointing to a stronger macroeconomic outlook in the near term. In January, the International Monetary Fund revised its U.S. growth forecast up slightly for both 2017 and 2018. A more solid economic outlook would likely bolster the commercial real estate property markets. There are still several trends worth keeping an eye on in the coming quarters that could result in up or downside risks to Boston’s outlook. Proposed budget cuts to NIH funding and concerns surrounding inflation are two to watch.
- The Greater Boston office market posted another positive quarter with more than 300,000 square feet in net absorption. Results were mixed with East Cambridge, Route 128 West and the Back Bay posting some of the strongest absorption. Metrowide vacancies inched down to 11.2% in the first quarter and direct asking rents grew to nearly $33 per square foot.
- The Greater Boston lab market remains hot. Net absorption totaled 219,492 square feet metrowide in the first quarter, with the Cambridge markets accounting for roughly half of this space. Metrowide vacancies are nearing 3% and East Cambridge vacancies are just a mere 0.2% as demand for space remains heated. With little new product on the immediate horizon and strong demand for space, look for market conditions to remain favorable in the coming quarters.
- The Greater Boston industrial market absorbed more than 500,000 square feet of space in the first quarter of 2017. Vacancies are sub-8%; reaching levels not seen in more than 15 years. Demand drivers remain vast and varied. E-commerce, housing and building-related firms, drug manufacturing, third-party logistics, breweries and medical marijuana facilities are all bolstering industrial demand in the marketplace.
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