Boston Metro commercial real estate has been popular with global investors for decades. Historically, our market has bounced back from economic challenges more readily than other U.S. cities, thanks to our diverse, growing economy and strong academic institutions. Yet all investments have risk, and today’s investors should consider issues that can affect any commercial real estate market. Here are examples from the Counselors of Real Estate at the New England Real Estate Journal, along with our own insights.
1. Extreme weather. According to Mass.gov, FEMA recorded 23 weather-related disaster declarations in Massachusetts between 1990 and 2019. Winter storms in New England have increased in intensity and frequency since 1950. Heavy rains increased 71% from 1958 to 2010. Of course, extreme weather isn’t unique to the Boston Metro; North America as a whole must contend with evolving weather patterns. With the prospect of future storms that could knock out infrastructure, damage buildings and disrupt supply chains, extreme weather risks must be acknowledged.
2. Interest rate increases and inflation. Consumers and businesses alike are facing economic pressures. So far, the Boston Metro area has been resilient, and the public is still spending. But if borrowing costs rise too sharply, and consumers put their wallets away, we could see weakened business activity, weakened commercial real estate demand and declining rents.
3. Remote work. It’s estimated that about 40% of Boston Metro office workers worked from home during 2022. The “hybrid” office attendance model could be here to stay, enabling employers to permanently reduce their office space occupancy. Fewer on-site employees means fewer customers for nearby businesses, affecting restaurants, shops and services. Still, there is some pushback to hybrid and remote work happening with some of the nation’s largest employers. A recession could change the dynamics.
4. Taxes and regulation. Massachusetts is a business-friendly state. However, the layers of federal, state and municipal regulation should always examined in respect to any property’s development and use potential. Tax planning should also be performed with a qualified CPA or professional tax preparer.
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!
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