New From NAI Hunneman’s Research Department: Q3 Metro Boston Market Report



Our third quarter office and industrial report is now available. You can access the full report here, and some highlights from the third quarter are listed below.

While results were mixed in both the office and industrial markets, overall net absorption remained positive in the third quarter of 2017. Optimism continues to grow amidst corporate expansions, and Greater Boston is likely near the top of Amazon’s HQ2 shortlist. Vacancy in the industrial market remains near record lows and growing interest from new entrants to the market point to the area’s greater national appeal. Below are some highlights from our Q3 2017 Market Report:

  1. With the groundbreaking of a handful of projects, office construction ticked up to almost 3.9 million SF in the third quarter. athenahealth recently broke ground on a 350,000-square-foot expansion at Arsenal Yards in Watertown and DivcoWest is moving forward with the first 450,000-square-foot office building at its NorthPoint development in Cambridge. The Abbey Group also recently filed plans for its redevelopment of the Flower Exchange site in the South End. The project will include more than 600,000 square feet of office space.
  2. Last-mile distribution has become the darling of the industrial market. The advent of 1-hour delivery and consumers’ need for convenience are driving demand for older, industrial product in infill locations throughout Boston. Moreover, industry experts suspect Amazon’s acquisition of Whole Foods is a logistics play, giving the e-commerce giant direct access to some of the nation’s wealthiest and densest zip codes. Look for more growth in Boston’s urban industrial markets from Amazon and its competitors as consumer spending patterns continue to evolve.
  3. At a macro level, transaction volume continues to slide from its 2015 peak — declining by 28% year-over-year as of July. While falling deal volume may seem concerning, pricing remains stable. Real Capital Analytics’ CPPI expanded by 1.1% from July to August, while CoStar Group’s CCRSI increased by 1.2% in the month of July. The growing bid-ask spread, modest economic growth and interest rate stability are key components driving these trends. Despite the recent slowdown, investment sales in US commercial real estate should remain positive with buyers focusing more on the multifamily and industrial asset classes.



Liz Berthelette is NAI Hunneman’s Director of Research. You can learn more about here on her bio or follow her on Twitter at @liz_berthelette.

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