Two weeks ago, the New England Real Estate Journal hosted the 2018 South of Boston Summit, where people working in industries ranging from construction to politics congregated to discuss the current state of the South Shore market. Discussions included the continued growth of the multifamily sector, historically low-interest rates and their impact on select commercial markets, and current and future development projects. While every panel was full of pertinent and relevant information, the projected real estate trends and their potential impacts on the Massachusetts market, discussed by one of the panelists, provided a virtuous overview of what trends we can expect to continue going forward. Below are three central takeaways:
- The Rise of Coworking: Coworking space in Boston has been a hot trend over the past 12 months. In the greater metro area alone, coworking assets account for nearly 2.5 million square feet. This has been bolstered by the booms of such companies as WeWork and Workbar, who continue to eat up office space, most recently in the Back Bay. This trend has also led landlords to change the basis of their rental rates from per/sf to per/person, something worth monitoring as this industry continues to grow.
- Live, Work, Play!: The heightened awareness of a healthy work-life balance has played a significant role in commercial real estate over the past few years. While traditional occupations such as banks and law firms provide little wiggle room for such an agenda, we’ve seen several start-ups and tech-based companies incorporate this into their brand. Such firms as Mimecast, an email security software company headquartered in Lexington, have built campuses to resemble forward-thinking companies like Google, where their workplace provides several amenities that have proven to increase the quality of their employee’s production. Such comforts include on-campus study/nap rooms, game rooms, fitness centers and so on. This trend has and will continue to grow as more and more industries begin to realize the many benefits of a healthy work-lifestyle equilibrium.
- The Suburban Price Relief Valve: The city of Boston is unique in the fact that rental rates drop significantly merely an hour outside of the metro area. This attribute, known as the suburban price relief valve, has allowed several industries to headquarter all facets of their company in the Greater Boston area. For example, a pharmaceutical company can strategically position their research & development department in the heart of the city, while paying a significantly lower rental rate for their manufacturing & distribution facility only an hour away.
The 2018 South of Boston Summit provided a very detailed overview of what is expected to transpire over the next couple of years in the real estate market. Included in this panel were central real estate trends projected to continue throughout the upcoming year. We believe that some of these trends, especially the ones outlined above, will play a substantial role in the landscape of Massachusetts real estate market for years to come.