Now a commercial real estate recovery?

Now a commercial real estate recovery?

Boston Condos for Sale

Now a commercial real estate recovery?

After years in the doldrums, Boston’s office market just posted its strongest quarter since 2019, a sign the city’s leasing slump may finally be turning a corner. 

Tenants signed nearly 1.9 million square feet of deals last quarter, Bisnow reported, citing new reports from CBRE and Hunneman, led by a wave of large commitments downtown.

In total, roughly 55 percent of leasing took place within the central business district, according to CBRE.

Renewals and expansions also gained traction, accounting for one-third of all leasing volume; that’s nearly double the previous quarter, per CBRE. BNY Mellon renewed 205,000 square feet at One Boston Place, while Datadog expanded to 125,000 square feet at 225 Franklin Street.

The uptick has yet to translate into lower vacancies. Greater Boston’s rate ticked up to 20.4 percent from 19.6 percent, Hunneman found, as tenants traded older addresses for newly delivered trophy buildings. 

Sublease availability — one of the market’s softest spots since 2020 — has declined for eight consecutive quarters, falling to 3.8 percent, according to CBRE. 

Deliveries added fresh supply to the mix. Hines’ South Station Tower secured an 11,000-square-foot lease from hedge fund Citadel, bringing occupancy above 100,000 square feet, while Boston Global Investors’ 10 World Trade contributed 257,000 square feet of availability to the market.

Still, churn continues as legacy tenants shed excess space. Forrester, Optum and the Education Development Center collectively listed more than 250,000 square feet for sublease last quarter. If JPMorgan Chase finalizes its rumored 250,000-square-foot consolidation at South Station Tower, even more backfill could follow.

Now a commercial real estate recovery?

Can AI development actually help the commercial real estate market?

 

Now a commercial real estate recovery?

Well, it looks like the downtown Boston condo market. Now is a commercial real estate recovery in the works?

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Comparing residential and commercial real estate to each other is like the proverbial apples-to-oranges comparison: They’re not quite the same.

But there are similarities between the two that reflect overall market conditions, just as both apples and oranges require water and sunshine to grow.

So it’s encouraging to see that the planned sale of the One Brigham Circle office-and-retail complex, in the Longwood Medical Area, is seen as a beginning of a potential turnaround in the local commercial market.

If so, it tends to confirm what we’ve being seeing on the housing front in the Boston area.

Files under: Good news.

Boston Condos for Sale

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