Cambridge Bucks the Trend

The Greater Boston office vacancy rate rose to 14.5 percent at the end of first quarter of this year, registering a negative growth for the fifth consecutive quarter, according to a report released by the Boston office of Lincoln Property Company.

The Cambridge office market, however, bucked the trend with a decline in vacancy rate to 10.4 percent from 10.8 percent at the end of fourth quarter of 2009, and an increase in asking rents during the first quarter of this year, added the report, which tracked 164.24 million square feet of office space across Greater Boston, including Boston, Cambridge, Suburbs and Interstate-495 markets.

Greater Boston direct office vacancy rate rose to 14.5 percent at the end of this quarter as compared with 11.7 percent at the end of the first quarter of 2009. With an additional 5.23 million square feet of sublease office space available, total current office availability (direct and sublease) is 20.5 percent as compared with 19.2 percent a year ago.

With the increase in direct vacancy, Greater Boston office market recorded 364,300 square feet of negative absorption in the first quarter of 2010, totaling to approximately 6 million square feet of negative absorption since the first quarter of 2009. On a positive note, Cambridge market’s office vacancy, a submarket benefiting from the 2.1 percent year-over-year growth in health and education employment in Massachusetts, fell to 10.4 percent, with an asking rental rate increase to $36.15 per square foot from $35.54 a quarter ago...

Full article from Citybizlist Boston available here: bostonrealestate.citybizlist.com/YourCityBizNews/detail.aspx

The Boston Realty Advisors Commercial Brokerage team has a very unique knowledge and expertise in the Boston Office Market. If your firm currently occupies space or is looking to occupy space in the Greater Boston Area, please contact one of our Cambridge Office Space tenant representation specialists here.   

Healthcare REIT Takes Minority Stake in Forest City's 1.2 Million SF University Park at MIT

If your firm currently occupies space or is looking to occupy space in Cambridge, please contact one of our Cambridge Office Space tenant representation specialists here.   

In honor of the 5-3 Team USA victory over Canada in Sunday's hockey event at the 2010 Vancouver Winter Olympics, I would like to present to you all my year end West Cambridge/Alewife office market report!

Let's go shopping for for new office space.  Accordning the the B & T, it is a great time to be a tenat in the marketplace.  Don't be caught standing on the sidelines.

"The year ahead is looking brighter for tenants looking for office space in Greater Boston, according to new report.

Boston's total office vacancy rose to 17.4 percent in 2009 from 13.9 percent a year ago, according to Jones Lang LaSalle's recent analysis. Occupancy declined steadily in the Cambridge office market through the first half of 2009, ending the year with 534,423 square feet of negative net absorption. For the year, the suburban office market recorded 1.3 million square feet of negative absorption.

The only submarket to record occupancy gains for the year was the Northwest submarket. A recovery in the Boston Suburban market will lag Downtown Boston and Cambridge, JLL predicted.

Greater Boston recorded 3.7 million square feet of negative net absorption in 2009. The second half of the year showed the first signs of the recession easing its grip on the global economy, and the rate of decline eased, according to a report.

"A return to economic growth and an eventual recovery in the job market will slowly work to stabilize the office market, but conditions will remain tenant favorable throughout 2010," the report found."

http://www.bankerandtradesman.com/news136888.html

Boston’s central business district has earned the unfortunate distinction as the most deflated rental market in all of the Americas¹. Combine that with a lackluster economic recovery characterized by problematic job growth will hamper the pace of any real estate market resurgence, which probably cannot gain much traction until late 2011 or 2012².

What does this mean for you and how do you capitalize on it? Landlords are working extremely hard to preserve market rents on renewals and new leases. Yes, those numbers have come down significantly, but more so then that, tenant improvement allowance (T/I) and rental concessions are two buckets that deserve far more play. When one thinks about cost of space PSF, it should be that of net effective basis. Meaning the asking price less the free rent, example a 60 month lease @ $35.00 PSF with 6 months free is $32.50. Rent abatement was not an available option for tenants 24 months ago, now it has become main stream. The amount depends on the financial viability of the tenant to perform as well the landlord’s competitiveness in the marketplace.

Tenant improvement allowance in the recent past never moved above 50% of the first years rent on a standard lease term. Now, we are seeing that number grow from 65% to 110% of the first years rent. In many cases in times past tenants would have to pay to move into their new space. Nowadays tenants are getting the benefit of turnkey deals, thus no out of pocket expense.

Why hire a broker if I plan to renew my lease? My landlord and I have a workable relationship. Your landlord profits by getting the highest rent possible from you. Until your broker creates competition with your landlord, you’re a captive Tenant exposed to paying above market.

The call to action is to seek out professional advice to assist you in these tumultuous times. To learn more about how the Boston Realty Advisors commercial leasing team can help your business, please do not hesitate to contact us. 

William H. Catlin, Jr. • Principal   
Boston Realty Advisors
715 Boylston Street • Boston MA 02116    
T 617.850.9606 • F 877.868.1672
www.bradvisors.com • wcatlin@bradvisors.com
Boston • New York

¹ Boston Business Journal – 12.1.2009

http://boston.bizjournals.com/boston/stories/2009/11/30/daily26.html

² Emerging Trends in Real Estate 2020 – PricewaterhouseCoopers

http://www.pwc.com/us/en/asset-management/real-estate/assets/2010-emerging-trends-us.pdf

Congratulations to the New Orleans Saints for winning their first Superbowl last night.  While Peyton Manning performed well for the Colts, the 74 yard interception touchdown by Traci Porter clinched the game for the Saints, 31-17.   Sorry, Dan Shaughnessy.

Back to real estate, I hope you enjoy my Year-End East Cambridge/Kendall Sqaure Office Space Report, featured below.

In order to help take Cambridge’s mind off of yesterday’s Massachusetts Senatorial election, I have decided to compile and release office space market stats for the Mid-Cambridge/Harvard Square submarket for Q4 2009.

While I will not reveal my own political endorsement, I felt that Cambridge residents may need a little distraction after their own Martha Coakley conceded the Kennedy Seat to Scott Brown, and what better distraction than some nice, juicy office stats!