Despite a lingering pandemic, the outlook for commercial real estate in the Boston Metro is largely positive for the rest of 2021, according to the 2nd Quarter Beige Book Report by the Federal Reserve Bank of Boston. Here are key highlights from the report!
Labor and Wages: The labor market is “tight” for virtually all skill levels in the Boston Metro. Several survey respondents indicated significant hiring plans in the year ahead, particularly in life sciences manufacturing, food production and software development. Wages are increasing, and will likely trend higher for skilled workers.
Tourism: Airlines saw a “substantial increase” in Boston passenger traffic in recent months. Hotel bookings and room rates are up, especially in the Cape Cod area. Labor shortages have made it challenging to capitalize on returning customers. However, retailers, restaurants and hospitality services experienced brisk business during the spring, and most are optimistic about the summer season.
Commercial Real Estate: Financing conditions have been favorable for business start-up and expansion. Loan rates for industrial and multi-family properties fell 25 basis points during the spring. Overall, industrial space demand is strong, through rents have increased gradually. Office vacancies declined in the Boston Metro, while rising in other parts of New England. Demand for life science lab space and life science manufacturing space remains high, though current construction activity may bring relief in the year ahead.
As is the case in so many areas of the country, material shortages and labor shortages have made new construction a costly prospect. These issues are causing a delay in bringing additional space to market.
While much of the report is positive, it is a broad overview of regional economic conditions. A number of small businesses in the Boston Metro continue to struggle with operational challenges, staffing shortages and rising supply costs. More than ever, it is important for a Boston Metro business to have professional tenant representation to ensure the best possible lease terms!
When you are ready to begin, relocate or expand your business, team up with the Jay Nuss Realty Group, LLC! Whether you are thinking of buying, leasing, or investing in Boston Metro commercial real estate, we can help you find the ideal property.