News
There’s No Place Like Home
December 2, 2010
| Today?s NAIOP/SIOR annual forecast at the Seaport Hotel highlighted the fact that Boston is among the top three investment markets in the US, alongside NY and DC. It's fueled by professional services and tech-oriented companies, providing specialized, knowledge-based products. Thanks for the compliment. We've never blushed at words with so many syllables before. |
 |
| The focus of downtown office activity has been shifting from the Financial District to the Back Bay while Kendall Square is a rising star in Cambridge. We snapped the crowd listening to MIT economist William Wheaton, NAI Hunneman?s Catherine Minnerly, FHO?s John Boyle, CBRE's Chuck Kavoogian, Colliers Meredith & Grew's Ron Perry, and Cushman & Wakefield's Ed Maher. Ron, who focused on downtown offices, says for the first time in his long career, the Financial District vacancy rate is twice that of the Back Bay. In part, it reflects deals like Bain?s 240k SF lease at the John Hancock Tower, and Financial District law firms that have generated lots of transactions but occupy less space than they did pre-recession. The Financial District is still a tenant?s market for the next 12 to 24 months. In the Back Bay though, Ron is seeing rents surpass those in the Financial District for the first time. |
 |
| Professor Wheaton (calling him that makes us feel young) says with ample capital flowing again, due in part to ?Chinese savers and Ben Bernanke,? cap rates are coming back down and will continue to do so. He's ?rather bullish? on the greater Boston R&D market. It's geared to light, nimble, high-tech manufacturing. R&D jobs are growing here at about twice the national rate. In contrast, the Boston office sector has to deal with scant job growth. Still, the region lost fewer jobs during the recession than the nation as a whole and CRE supply is constrained. Boston values should recover by 2017, better than the 14 years it took to bounce back from the ?91 downturn. |
 |
| As the crowd dispersed, we snapped Ed Maher (with John Boyle and Chuck Kavoogian) who says 2010 investment sales have been ?great? and 2011 will be ?epic? in Boston, which he ranks No. 1 in the US. Sales of trophies like the John Hancock surpassed expectations, and so far in '10 is the largest sale in the nation, second largest in the world (calls to the universe were left unanswered, but isn't that way?). That, Ed says, is bringing more investment capital in to the city. A critical factor is that Boston job loss in '09 was 4.9% compared to 6% for the nation. John had a stern message on suburban offices: Absorption has been good, but a lot of new space has been built. Chuck had good news. Cambridge, namely Kendall Square, is hot with leverage swinging to the landlord. He envisions lots of cranes in ?11, perhaps even some spec development. |
