The Boston Business Journal reports that office space in Boston’s central business district will command a premium during the next three years, with rents increasing by about 10% year-over-year.
From 2014 to 2017, Boston’s cumulative office rents are expected to increase by about 33%, well ahead of the national projected average of 25%.
The forecast is drawn from Cushman & Wakefield’s U.S. Office Overview & Forecast, released April 20, 2015. Cushman & Wakefield place Boston at the top of projected U.S. office market rent gains for these primary reasons:
1. Boston’s office tenants are evolving from financial and legal services to technical companies. Tech companies accounted for 28% of all new leases in Boston’s central business district during 2014.
2. Pre-leasing activity for new construction is very strong. Continued growth in Boston’s tech sector will sponsor ongoing demand.
3. Today’s office tenants in the central business district are looking for new or renovated office space that can enhance their brands, and attract a young, well-educated workforce. Tenants are seeking modern efficiencies as well as trendy aesthetics when choosing office space.
It’s important to note that while Boston office rents are expected to climb aggressively, this projection applies to new or renovated office space. Boston is #1 for rent increases, but only #9 for declining vacancy. In fact, our office vacancy rate is expected to remain slightly higher than the U.S. average through 2017, with a projected vacancy rate of about 7.9%.
The Cushman & Wakefield report also indicates that office space outside of traditional downtown areas will be in demand as well. The most attractive locations will offer a good mix of office, retail, residential and recreational space, with access to public transportation.
Finding the right office location for your business involves a host of factors that are unique to your business needs. Using the guidance of an experienced commercial real estate broker who understands the market is essential to your success!
Whether you are thinking of buying or leasing Boston Metro commercial real estate, we can help you find the ideal property. Please contact us today for expert guidance!