The latest regional economic surveys conducted by the Federal Reserve Bank of Boston, as published in the Beige Book, show continued optimism for commercial real estate during 2017. Here are highlights from the first quarter report!
Commercial real estate activity was mostly unchanged from late 2016 to early 2017, with several sectors reporting momentum. Demand for industrial property appeared to increase more broadly, driving new build-to-suit construction in numerous locations.
In Boston, Portland, and Providence, office leasing activity was described as good, while vacancy rates remained low to very low. In Boston, respondents report that the city’s office absorption pace has slowed in recent months. This is partly attributed to an employer trend of reducing the space allotted per worker.
Meanwhile, office construction remains limited through most of New England. Respondents say high building costs and a modest outlook for future demand has kept speculative projects in check.
Investment in commercial property remains robust, and Boston’s investment sales saw steady demand in recent months. However, prices are high by historical standards, and some investors are expressing caution over future price direction, especially in an environment of rising interest rates.
Respondents offered mixed reports on the retail leasing market. The region’s mid-market malls saw increased anchor store closings from national chains, nudging vacancy rates higher. Conversely, demand for core urban retail and high-end mall space remains strong.
Taken as a whole, respondents are cautiously optimistic that commercial real estate fundamentals will hold steady or improve in 2017. Some uncertainties are present due to administrative policy issues that are still in formative stages.
When you are ready to begin, relocate or expand your business in the Boston Metro, team up with the Jay Nuss Realty Group! Whether you are thinking of buying or leasing Boston Metro commercial real estate, we can help you find the ideal property. Contact us today for expert guidance!
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