Downtown numbers can be deceiving

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From JLL’s Ben Hux

The Downtown submarket locked in an unchanged vacancy rate of 11.7 percent heading into Q2. That being said, leasing activity was very strong but it was the kind that evades statistics.

UMass signed a lease for 62,000 square feet at One Beacon Street before the space became vacant. A number of sublease deals were struck as well, notably by Localytics and LevelUp at 101 Arch Street, and by Stag Capital at One Federal Street. These also aren’t included in our direct vacancy numbers, but do point to leasing velocity.

The leasing of vacant space also occurred. This was overshadowed by a couple of large listings, mainly from Bank of America at 100 Federal Street and the Chubb Group at One Financial Center.

Asking rents rose on average by 1.1 percent from Q4 2013 to $51.54 psf gross. Rents are rising due to healthy fundamentals, asset repositioning and aggressive underwriting.

Downtown is undergoing a well-publicized boom in the construction of new multi-family and retail. This growth, coupled with the city’s expanding innovation economy, has attracted a non-traditional office user.

Millennium Tower will create nearly 100,000 square feet of additional retail space in the BID including a Roche Bros. grocery store. Also in Downtown Crossing, construction is set to start at 59 Temple Place on a new 243-room boutique hotel. At Government Center, proposals for the garage redevelopment and Haymarket Square Parcel 9 call for a combined 100,000 square feet of new retail space.

Residential development has been increasing significantly over the past few years, with more than 1,600 units currently under construction. All of these changes are in response to socio-economic trends that will be foundational in creating a transformed Boston in the coming years.

 

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