Reis Updates Boston Observers

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Reis Updates Boston Observers

by on May 27, 2010


The Reis Observer team posted 1st Quarter 2010 Boston market narratives for all property types. Here are brief summaries from each commercial property report.

Boston Apartment Market

The Boston metropolitan market rate, investment grade apartment market was relatively stable in the first quarter of 2010, and first quarters are typically the weakest of the year for apartments.  Although vacancy remains at record levels by local standards, it has risen little for a year and is well below the U.S. average, while the rent declines have nearly ceased.

Boston Office Space

After showing signs of stability the previous three quarters, the Boston multi-tenant office market deteriorated sharply in the first quarter of 2010, according to Reis data. Despite the setback, some market watchers have become optimistic. “Real estate tends to lag economic recovery by about six months, brokers said, and given overall economic improvement, they are looking toward the third and fourth quarters of 2010 for commercial real estate to hit its low before beginning to turn around,” according to the Boston Business Journal. Things are “less bad” for Boston office space, according to this source.

Commercial Retail

Boston’s neighborhood and community center market has the tenth lowest vacancy rate among the top markets tracked by Reis, but one of the highest vacancy rates ever recorded locally. While the recession has had an impact here, local structural conditions—high incomes and high barriers to new retail development—have limited the damage. As noted by The Patriot Ledger “the sharp two-year downturn has roiled one of the nation’s most stable retail markets, forcing malls to recruit local tenants, scuttling plans for new centers and slowing the opening of others” but “the worst of the shakeout appears to be over.”

Industrial Real Estate

The weakness of the multi-tenant, nonmanufacturing metropolitan Boston industrial real estate market is a saga going back half a century, with brief interruptions such as the late 1990s tech boom. At the start of 2010, this market once again had the highest vacancy rate among the top markets tracked by Reis. After years of weakness, rents have become quite low given the overall income and cost of living in the area and the proportion of high-grade high-tech space.  Hopes for high-tech expansion and adaptive reuse of obsolete buildings, some more than a century old and most more than 50 years old, remain the main themes here.

Full versions of these reports including further detail on the 1st quarter 2010 results are available now.