According to JLL’s Matt Daniels, the Greater Boston suburbs fall into two categories. The Fortress Market is comprised of 18.8 million sf of Class A space stretching from Woburn to Needham. Then there’s 70.7 million or everything else.
“The Fortress Market makes up the top 20% of suburban office supply, but averages 370,845 sf of annual absorption which is twice as much as the balance of the market” Matt said at NAIOP/SIOR’s Mid-Year Market Roundup. “This is where institutional capital is focused.
“Tenant demand for this quality space is high,” he continued. “We are now seeing the first sub 10% vacancy in recent history.”
Year-over-year current rent growth was 7.4% in the Fortress Market, and we expect this trend to continue. Build-to-suit and spec development have become a reality, particularly in Burlington. The Gutierrez Company’s 4 Burlington Woods will add top tier product. Construction has begun here, and a “sneak peak” breakfast presentation will be held tomorrow at Keurig’s new headquarters for the real estate community. Additionally, the changes underway by National Development at New England Executive Park are truly transformative. A big retail announcement is coming in the fall.
In his economic overview, keynote Hans Nordby, Managing Director at CoStar, echoed Matt’s optimism. “With job growth expected to be steady, there is a very good story to tell over the next 18 months,” he said. “Our vacancy rates for commercial space are well below the national average. It looks like we’re in for a very good ride.”