Boston: What to Watch for in 2020
The Future of WeWorkWeWork’s failed IPO made international headlines at the end of 2019, and it will be interesting to see how the coworking company maintains its presence in the Boston market. After facing significant job layoffs and resolutions to cut costs further, there are rumors of around one hundred lease terminations around the US. With that said, the Boston market seems to be relatively safe at the moment, thanks to a healthy occupancy. An often overlooked questioned will revolve around WeWork’s HQ model that is currently serving as a stopgap for companies like Amazon and Puma who await their build-to-suit locations to come out of the ground. It remains to be seen how multi-floor vacancies will be back filled as tenant relocate to their more permanent homes.
South Station’s EvolutionWith financing officially taken care of, the long-awaited Hines development project above South Station is slated to break ground in early 2020. The first phase will bring 768,000 square feet of available office space to market. This will undoubtedly become one of the most attractive sites in all of downtown Boston, thanks to its proximity to public transportation and major highways. A project that has been in the works for decade is finally slated to break ground and transform Boston’s every changing skyline.
Still-Rising RentsAcross the Boston area, rent continues to rise in all asset classes. With premier Back Bay space now commanding over $100/SF in gross rental income, tenants will continue to search for value to help mitigate rising expenses. With limited new product coming to market this calendar year, landlords will remain bullish until a larger macro-economic event slows the market which today doesn’t offer many options for tenants. Lower concession packages, percentages rental increases and higher face rates are all ways in which landlords across the city are taking advantage of a tight market.
Lab to BostonLab development in Boston will continue to increase with Related Beal, Alexandria, and National Development staking their claims with new development along the Fort Point Channel. As rents rise and a lack of vacancy affects the area, lab tenants will continue to look for alternatives to Kendall Square’s already booming market, while other companies will explore alternatives to East Cambridge’s saturated neighborhood.
To definition of a successful real estate project varies for all tenants. Our job at Cresa is to understand our clients desired outcomes, position them within the market to achieve those outcomes and to deliver the highest quality service along the way. If you have any questions about the market, reach out and find out how we can help you have your own success in today’s ever-changing real estate landscape.
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