Greater Boston showed measured growth in the first months of 2015 as direct rents grew 40 basis points quarter-over-quarter, according to JLL’s 2015 Q1 Boston Office Insight report.
Winter storms slowed activity in the CBD and Cambridge, but the suburban markets didn’t miss a beat. The suburbs recorded total direct absorption of 780,000 square feet in Q1, with over 80% of Greater Boston’s leasing activity occurring here highlighted by several large transactions in Lexington and Waltham: Shire Pharmaceuticals’ for 200,000 sf at Two Ledgemont Center, and 104,000 sf of interim space lease at 235 Wyman. Two Ledgemont Center is adjacent to Shire’s HQ lab and will become the largest suburban biotech campus in Greater Boston.
Investors continue to be active. An impressive 27 office transactions closed totaling over 3.5 million sf. While Class A transactions accounted for 70.0 percent of sales volume, these Class B transactions raised the bar for quality, creative spaces: DivcoWest’s portfolio sale of 300 A Street, and 313 and 330 Congress Street to Multi-Employer Property Trust for $105.6 million.
The highest sale price happened Downtown with Mass Development’s sale of 100 Cambridge Street to Intercontinental Real Estate Corporation for $280.0 million.
2015 is set to deliver triple the amount of space delivered in 2014, but 65.0 percent of the pipeline underway are build-to-suit projects. The largest of these, the 700,000-square-foot headquarters for Partners Healthcare in Somerville, broke ground this quarter.
The lack of availability in quality office space across the market combined with unemployment levels dipping below 4.3 percent are expected to contribute to rising rents and tightening fundamentals this year.
Greater Boston Q1 Stats Summary