Q2 2012 Boston, Massachusetts Retail Property Sales Analysis

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Q2 2012 Boston, Massachusetts Retail Property Sales Analysis

Metro Volume and Pricing

Qualifying single property Boston retail investment sales were moderate in the second quarter of 2012, as 13 properties sold for $168 million, at a mean price of $408 psf.* This brought the half-year total to $239 million; the dollar value of sales for all of 2011 had been $933.5 million, at a mean price of $375 psf. The leading second quarter sale was a 122,104-square-foot property on Massachusetts Avenue in Cambridge, sold by Samuels Property Group to L&B Realty Advisors LLC for $40.1 million ($328 psf) in May. In April, the 44,287-square-foot One Faneuil Hall in Boston was transferred from Faneuil Hall Square LLC to One Faneuil Hall LP for $40 million ($903 psf).

Top Submarkets

The Central Boston submarket led in both square footage sold at 692,879, and dollar value sold at $341 million, over the past four quarters. The mean price is also the highest in Central Boston at $492 psf. The Southwest/Bristol submarket led the suburbs during the most recent 12 months with 191,457 square feet sold for $56 million, although the mean price was higher at $359 psf in South Shore/N. Plymouth submarket.

Cap Rate Comparisons and Forecasts

The mean cap rate for retail property sales was 10.5% in the second quarter, more than double the quarter before and the highest since 2009, during the worst of the recession. Generally below the U.S. and Northeast region averages, the mean cap rate for Boston was far above in the second quarter. The rolling 12 month cap rate increased 10 basis points during the quarter to 6.7%, a below average reading for this market. Even lower cap rates are forecast going forward.