Hub Running Out Of Space; Where’s Next Urban Cluster?September 19, 2018 - By Brendan Carroll - Perry Research
BOSTON–A steady pattern of new corporate entrants, anchored-development announcements and significant project approvals continued in the Greater Boston market in the third quarter of 2018. Absorption was a positive 644,000 sf as vacancy, impacted by 939,000 sf of new completions, edged up 0.1 percent to 11.1 percent. While sharp lease rate increases have been largely confined during the now-seven year period of sustained regional commercial to distinct high demand areas; a metered, near universal statistical increase seemed to suggest a landlord effort to increase pricing, even if modestly, in light of widening discounts to the region’s most preferred areas. With Boeing and Verizon each announcing they will anchor larger multi-use developments, a trend of newly developed assets being acquired for valuations eclipsing $1,000 per sf continued as the BCGanchored 140 Northern Avenue traded for a record $1,208 per sf. As the region’s strengths continue to create its own critical mass, the principal and growing concerns of scarce availability and decreasing affordability become more apparent. As a “Hub” figuratively, a near-certain sustained development and densification of its core areas could likely be complemented by a certain number of surrounding high-density areas, with the State’s assistance in aggressive efforts to lure the Red Sox’ minor league team to Worcester an indication of a desire to create a dominant second urban cluster within Boston’s exurban layer.
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