Boston Commercial Real Estate Report – Q1 2013

CAMBRIDGE, Mass. - May 16, 2013 - PRLog -- 1.     Boston Industrial Market- Q1 2013
Check out our Industrial listings: http://www.abgllc.net/index.php/properties/for-lease/industrial

In the first quarter of 2013, Boston’s Industrial market has shown marked improvement in several areas when compared with data drawn from 2012. The market ended with an overall vacancy rate of 10% at the end of the quarter, decreasing from 10.4% at the end of the 4th quarter of 2012. The overall vacancy rate and sublease vacancy rate also dropped for flex and warehouse projects, respectively. In addition to a lower vacancy rate, the market has seen an increase in net absorption.

For this quarter, the net absorption for Boston’s overall Industrial market was a positive 2,213,195 square feet, compared to a positive 1,442,028 SFat the end of the previous quarter. Similar to vacancy rate, this growth is reflected in the figures for flex and warehouse projects, both of which have seen an increase in net absorption.

Quoted rental rates for Boston’s available industrial space have also risen from $6.09 per square foot per year at the end of the fourth quarter of 2012 to $6.14 per square foot per year at the end of the most recent quarter. This 0.8% increase in quoted rental rates reflects a spike in the value of industrial buildings. Sales activity is another contributing factor in determining the value of these buildings. The total year-to-date industrial buildings sales activity for 2012 is up from the previous year, both in terms of the number of industrial sales transactions and the average price per square foot.

One notable transaction that occurred within the last four quarters is the sale of83 Commerce Way – Marshalls Distribution Center in Woburn. This 817,638-square-foot industrial building sold for $33,575,000 or $41.06 per square foot on 7/27/2012.

2.     Boston Office Market – Q1 2013

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Boston’s Office market concluded the first quarter of 2013 with a vacancy rate of 10.1%, showing no change from the end of the fourth quarter of 2012. The vacancy rate for Class-A projects only saw a 0.1% decrease from the end of last year to the end of the most recent quarter. The respective changes in vacancy rate for Class-B and Class-C projects from quarter-to-quarter were a 0.1% increase and 0.2% decrease.  These increases and decreases are also reflected in the sublease vacancy rate reported by Class-A, Class-B, and Class-C buildings for the two previous quarters.

The figures for net absorption in this report highlight a significant decrease in the amount of space occupied by Office buildings when stacked against net absorption in 2012. This past quarter, the net absorption for office markets was apositive 378,735 square feet, compared to a positive 1,068,243 square feetin the fourth quarter of 2012. Class-A, Class-B, and Class-C projects have all seen a substantial drop in net absorption.

The average quoted rental rate for the Office market after the first quarter of 2013 was listed at $20.20 per square foot per year. This marks a decrease of 0.2%compared to the quoted rental rates for the last quarter of 2012, where rents were reported at $20.24 per square foot per year. This reduction in rental rate shows a slight decline in the overall value of Office buildings.

There have been a few notable deliveries completed during this past quarter. Two of these deliveries include 1175 Boston Providence Tpke, a 160,000-square-foot facility and 31 Stiles Rd, a 48,000-square-foot building. The largest and most noteworthy transaction made in the past four quarters was the sale of 100 Federal St in Boston, completed on 3/13/2012. This 1,304,899-square-foot office building sold for $615,000,000, or $471.30 per square foot. (Costar)

3.     Boston Retail Market – Q1 2013
Check out our Retail listings: http://www.abgllc.net/index.php/properties/for-lease/retail

After the first quarter of 2013, Boston’s Retail market experienced minimal change in market conditions. The retail market saw its vacancy rate decrease from 4.4% at the end of 2012 to 4.3% at the conclusion of this most recent quarter. Vacant sublease space has trended down as well this quarter, finishing with 540,632 square feet, compared to 594,589 square feet of vacant space after the second quarter of 2012.

The first quarter of 2013 ended with an increase in retail net absorption. A positive 342,086 square feet was absorbed in the quarter, slightly up from261,629 square feet at the end of 2012. Net absorption numbers for specific types of retail buildings ranged from negative to positive. For this previous quarter, shopping centers absorbed a positive 33,068 square feet, power centers experienced negative 79,046 square feet of absorption, and malls absorbed positive 4,210 square feet.

Sales activity and rental rates are two areas where the retail market has seen improvement. In the fourth quarter of 2012, 36 retail transactions closed, totaling2,049,455 square feet with an average price per square foot of $172.26. These numbers are up from 2012’s third quarter, in which 20 transactions were made, totaling 1,308,243 square feet at an average price per square foot of$167.71. Quoted rental rates ended the first quarter of 2013 at $15.81 per square foot per year, compared to $15.61 for the fourth quarter of 2012.

Notable deliveries in the retail market for this quarter include 50 Pleasant St, a 29,400-square-foot facility and 62 Great Rd, a 27,962 square-foot building. Both of these properties were delivered in the first quarter of 2013. One of the largest transactions made during this quarter was the sale of 1 Faneuil Hall Square in Boston. This 44,287 square foot retail building sold for

$40,000,000 on 4/6/2012. (Costar)