Wouldn’t everyone involved in the capital markets like to see more deal flow? Jones Lang LaSalle’s weekly national investment sales call inspired me to compare how Boston’s deal flow is stacking up against other “gateway cities.”
I searched for office transactions greater than $50mm over the past year in New York, San Francisco, Washington and Boston. New York led the way with thirty-nine, Washington twenty-four, San Francisco ten, then Boston with an abysmal three.
Many factors can and do affect transaction volume. I plucked a few key stats to see how Boston was stacking up.
Boston’s Class A CBD is smaller than the other three cities but this does not account for the sizable differential in sales. The key factor appears to be the surprisingly small number of firms that control a sizable amount of Boston’s real estate. If just six firms put dispositions on hold, then over 40% of the Class A market becomes off limits.
Breaking into the Boston market is challenging. Firms that are able to gain a foothold in the city are reluctant to give it up, and those with an opportunity to invest are going to have to pay for it.