2018 Commercial Real Estate Forecast
by Garry Holmes, President
The economic fundamentals remain strong going into 2018. Somehow, the market has been able to withstand the average 7 year bull market as we continue into the 9th year. Boston and its suburbs have been one of the most dynamic real estate markets, confirming its place as a top tier market with the move onto round 2 of Amazon’s HQ2 search. Industrial space has been the hottest product, regardless of the sub-market. We expect the Boston and suburban office market to maintain strong fundamentals, although the I-495 markets will continue to experience difficulty in enticing millennial employers.
With just over 100 million square feet, the suburban office market exhibits mixed results between various sub-markets. Central 128 currently has the most momentum with Needham surprisingly posting the lowest vacancy rate in Q4 2017. As the rents continue to rise in downtown Boston, Central 128 provides the option of lower rents, great amenities, and access to public transportation.
The suburban markets of concern are along I-495. The trend of urban demand has greatly impacted this far west market, which lacks the access to amenities and public transportation. However, several developments coming to the area will help bring more life and interest. Marlborough is clearly the bright spot along I-495.
- Office tenant demand in Boston far exceeds the suburbs
- VC funding expected to remain strong
- Concerted effort by Landlords to differentiate themselves with progressive amenities
- Location of the office dictated by where the employees live rather than executives
- Suburban companies adding an office presence in Boston