Market ReviewMetro Boston Real Estate Market Review | 3rd Quarter 2012 Committed t...
Metro Boston Real Estate Market Review Q3/12 Table of Contents I. Overall Market Conditions ...
Metro Boston Real Estate Market Review Q3/12 Office Market Conditions CLASS A & B OFFICE MARKET Office ...
Metro Boston Real Estate Market Review Q3/12 Boston Office Market FEATURED PROPERTY ...
Metro Boston Real Estate Market Review Q3/12 Cambridge Office Market FEATURED PROPERTY ...
Metro Boston Real Estate Market Review Q3/12 Suburban Office Market FEATURED PROPERTY CLA...
Metro Boston Real Estate Market Review Q3/12 Industrial/Flex Market FEATURED PROPERTY ...
Metro Boston Real Estate Market Review Q3/12 Investment Market FEATURED PROPERTY ...
Metro Boston Real Estate Market Review Q3/12NAI Hunneman ContactsCorporate Chris Gotfredson ...
Metro Boston Real Estate Market Review Q3/12 Methodology, Definitions & Submarket ...
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NAI Hunneman Market Review Q3 2012

Published on: Mar 3, 2016
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Transcripts - NAI Hunneman Market Review Q3 2012

  • 1. Market ReviewMetro Boston Real Estate Market Review | 3rd Quarter 2012 Committed to Boston. Connected to the World. 303 Congress Street | Boston MA 02110 | 617.457.3400 | www.NAIHunneman.com
  • 2. Metro Boston Real Estate Market Review Q3/12 Table of Contents I. Overall Market Conditions II. Boston Office Market III. Cambridge Office Market IV. Suburban Office Market V. Industrial/Flex Market VI. Investment Sales Market VII. Office Contacts NAI Hunneman | 303 Congress Street | Boston MA 02110 | 617.457.3400 | www.NAIHunneman.com
  • 3. Metro Boston Real Estate Market Review Q3/12 Office Market Conditions CLASS A & B OFFICE MARKET Office Space Direct Sublease Total Average Direct Total Submarket Inventory Vacant Space Vacant Space Vacant Space Rental Rates Vacancy % Vacancy % Financial District 41,747,740 5,402,358 125,889 5,528,247 $39 12.9% 13.2% North Station/North End 7,658,801 183,178 18,459 201,637 $30 2.4% 2.6% South Station/Ft. Point 7,569,064 1,429,638 0 1,429,638 $31 18.9% 18.9% Charlestown 3,074,864 115,144 22,825 137,969 $29 3.7% 4.5% Back Bay 14,249,481 620,773 133,958 754,731 $50 4.4% 5.3% Downtown Boston 74,299,950 7,751,091 301,131 8,052,222 $39 10.4% 10.8% East Cambridge 12,372,244 1,143,430 63,821 1,207,251 $58 9.2% 9.8% Central Cambridge 5,570,161 563,409 12,200 575,609 $32 10.1% 10.3% West Cambridge 2,034,094 273,467 25,000 298,467 $31 13.4% 14.7% Cambridge 19,976,499 1,980,306 101,021 2,081,327 $48 9.9% 10.4% Route 128 North 17,644,075 2,230,353 58,059 2,288,412 $20 12.6% 13.0% Route 128 Northwest 14,008,835 2,041,273 202,277 2,243,550 $21 14.6% 16.0% Route 128 West 27,589,045 3,339,664 322,598 3,662,262 $26 12.1% 13.3% Route 128 Southwest 5,337,339 626,146 53,841 679,987 $18 11.7% 12.7% Route 128 South 10,216,054 1,943,731 67,085 2,010,816 $21 19.0% 19.7% Route 128 Loop 74,795,348 10,181,167 703,860 10,885,027 $22 13.6% 14.6% I-495 North 6,829,559 1,398,222 30,448 1,428,670 $18 20.5% 20.9% I-495 Northwest 9,170,504 1,430,046 83,562 1,513,608 $17 15.6% 16.5% I-495 West 11,527,802 2,612,260 253,532 2,865,792 $16 22.7% 24.9% I-495 Southwest 2,003,721 503,662 2,365 506,027 $20 25.1% 25.3% I-495 South 1,511,354 203,833 0 203,833 $20 13.5% 13.5% I-495 Loop 31,042,940 6,148,023 369,907 6,517,930 $17 19.8% 21.0% Metropolitan Boston 200,114,737 26,060,587 1,475,919 27,536,506 $30.24 13.0% 13.8% CLASS A & B OFFICE – AVAILABLE SUBLEASE SPACE & RENTS Office AVAILABLE SUBLEASE SPACE SUBLEASE ASKING RENTS Submarket Q3 2012 Q2 2012 Q1 2012 Q4 2011 Q3 2012 Q2 2012 Q1 2012 Q4 2011 Downtown Boston 1,044,080 1,114,541 895,883 971,193 $25.57 $24.35 $21.92 $26.15 Cambridge 823,566 348,404 175,687 222,181 $29.33 $28.53 $26.35 $25.79 Route 128 Loop 2,044,466 1,769,201 1,988,543 2,112,798 $18.47 $18.22 $18.95 $18.56 I-495 Loop 787,247 884,462 941,182 1,053,222 $16.90 $15.76 $15.58 $15.67 Metropolitan Boston 4,699,359 4,116,608 4,001,295 4,359,394 $19.10 $18.22 $17.84 $18.40 CLASS A & B OFFICE – CHANGES FROM PREVIOUS QUARTER & YEAR Office ASKING RENTS VACANCY RATES ABSORPTION Submarket Q3 2012 Q2 2012 Q3 2011 Q3 2012 Q2 2012 Q3 2011 Q3 2012 Q2 2012 Q3 2011 Downtown Boston $38.77 $37.65 $36.74 10.84% 11.29% 11.95% 187,561 447,413 312,781 Cambridge $47.92 $47.69 $40.78 10.42% 10.79% 10.78% (66,803) 9,022 173,853 Route 128 Loop $22.38 $22.59 $22.42 14.55% 14.80% 15.75% 354,758 306,732 (140,890) I-495 Loop $17.36 $17.35 $18.14 21.00% 20.72% 18.83% 49,884 (143,990) (276,311) Metropolitan Boston $30.24 $29.87 $28.85 13.76% 14.01% 14.34% 525,400 619,177 69,433Source: CoStar, NAI Hunneman Commercial Company Prepared: July 2012 Rental Rates are asking rents on direct space as reported by Costar.Disclaimer: The above data is from sources deemed to be generally reliable, but no warranty is made as to the accuracy of the data nor its usefulness for any particular purpose. NAI Hunneman | 303 Congress Street | Boston MA 02110 | 617.457.3400 | www.NAIHunneman.com
  • 4. Metro Boston Real Estate Market Review Q3/12 Boston Office Market FEATURED PROPERTY CLASS A OFFICE SPACE 18 Newbury Direct Sublease Total Average Direct Total Street Office Space Vacant Vacant Vacant Rental Vacancy Vacancy Submarket Inventory Space Space Space Rates (%) (%) Boston, MA First-class office space on the Financial District 31,690,082 4,441,706 69,517 4,511,223 $42 14.0% 14.2% prestigious first block of North Station/North End 1,346,531 0 0 0 $48 0.0% 0.0% Newbury Street . Contact: Bonny Seaport 1,998,548 351,773 0 351,773 $60 17.6% 17.6% Doorakian at 617.457.3317 Charlestown 903,771 59,693 0 59,693 $33 6.6% 6.6% Back Bay 11,571,430 496,436 127,824 624,260 $53 4.3% 5.4% TRENDS Downtown Boston 47,510,362 5,349,608 197,341 5,546,949 $45 11.3% 11.7%• The Perfect Storm: Back Bay, East Cambridge and the Seaport continue to CLASS B OFFICE SPACE raise rents as inventory declines, pushing Direct Sublease Total Average Direct Total frustrated tenants to seek favorable Office Space Vacant Vacant Vacant Rental Vacancy Vacancy Submarket Inventory Space Space Space Rates (%) (%) economics in the Boston Financial District.• Innovation District Incubators growing Financial District 10,057,658 960,652 56,372 1,017,024 $29 9.6% 10.1% and seek economic relief as they comb the Mid-town district for value plays. North Station/North End 6,312,270 183,178 18,459 201,637 $26 2.9% 3.2%• Downtown Crossing heats up with tenant activity in the office sector as competition Seaport 5,570,516 1,077,865 0 1,077,865 $21 19.3% 19.3% for Financial District space remains strong.• Owners continue to opt out of this Charlestown 2,171,093 55,451 22,825 78,276 $27 2.6% 3.6% “heated” market as evidenced by Brickman selling a portion of its Boston portfolio; Back Bay 2,678,051 124,337 6,134 130,471 $39 4.6% 4.9% National Development seeking record pricing for Seaport holding; and Cargo Ventures Downtown Boston 26,789,588 2,401,483 103,790 2,505,273 $27 9.0% 9.4% may hit a home run with sale of One Harbor Source: CoStar, NAI Hunneman Commercial Company. Prepared: September, 2012. Rental Rates are asking rents on direct space as reported by Costar. Street. Timing is everything! Disclaimer: The above data is from sources deemed to be generally reliable, but no warranty is made as to the accuracy of the data nor its usefulness for any particular purpose.• Lease Transactions drag on as tenants ponder the potential effects of the economic NOTABLE TRANSACTIONS • First Republic takes 50,000 SF at outlook and the presidential election. 160 Federal Street. • Zipcar lands new 50,000 SF headquarters on Thompson Way in “Innovation” District. • New England Pension Fund leases• Average Boston Lease Transaction 40,000 SF at 255 State Street. shrinks to 5,500 SF. • Catalina Marketing makes the 22,000 SF leap from Quincy to 24 Farnsworth Street in • Brickman and Divco West set to seal• West Coast firms are starting to look at “Innovation” District. the deal; before year-end 2012. the Innovation District to establish an East • Iron Mountain & Homesite have inked Coast presence. deals in low-rise space at One Federal Street. NAI Hunneman | 303 Congress Street | Boston MA 02110 | 617.457.3400 | www.NAIHunneman.com
  • 5. Metro Boston Real Estate Market Review Q3/12 Cambridge Office Market FEATURED PROPERTY CLASS A OFFICE SPACE Direct Sublease Total Average Direct Total Office Space Vacant Vacant Vacant Rental Vacancy Vacancy Submarket Inventory Space Space Space Rates (%) (%) East Cambridge 10,333,520 1,003,662 63,821 1,067,483 $59 9.7% 10.3% Central Cambridge 3,184,582 466,074 0 466,074 $33 14.6% 14.6% West Cambridge 1,404,765 254,038 0 254,038 $34 18.1% 18.1% Cambridge 14,922,867 1,723,774 63,821 1,787,595 $51 11.6% 12.0% CLASS B OFFICE SPACE Direct Sublease Total Average Direct Total 1035 Cambridge Street Office Space Vacant Vacant Vacant Rental Vacancy Vacancy Submarket Inventory Space Space Space Rates (%) (%) Cambridge, MA East Cambridge 2,038,724 139,768 0 139,768 $50 6.9% 6.9% 12,226 SF for sale Central Cambridge 2,385,579 97,335 12,200 109,535 $32 4.1% 4.6% on the second floor. West Cambridge 629,329 19,429 25,000 44,429 $25 3.1% 7.1% Contact Greg Larsen at 617.457.3321 Cambridge 5,053,632 256,532 37,200 293,732 $38 5.1% 5.8% Source: CoStar, NAI Hunneman Commercial Company. Prepared: September, 2012. Rental Rates are asking rents on direct space as reported by Costar. TRENDS Disclaimer: The above data is from sources deemed to be generally reliable, but no warranty is made as to the accuracy of the data nor its usefulness for any particular purpose.• Demand: Cambridge market demand lowered the Class A vacancy rates across mid-year spread from 9 to 21.6% between • The deal flow from East Cambridge to Boston the board by almost 1% over last quarter, East and West Cambridge is now only 4.9% continues, particularly with the Seaport area but the added supply of 400 Tech Square (9.8 to 14.7%), which means Alewife is acting as the major outlet. Last quarter’s and 640 Memorial Drive coming on line kept tightening fast. The lab vacancy is holding prediction that the Seaport District will the Class A total vacancy at 12%. What’s at 12.7%, similar to 2011 numbers, as an become as tight as East Cambridge has remarkable is that most of those two had fairly even balance continues so far between rapidly come true, already and forcing even been leased already, so the vacancy has added supply and deals being made. high tech tenants to consider the more vacant barely changed. Class B office reflected the and affordable Class B or low-rise Class A tightening scene, dropping almost 2 points NOTABLE TRANSACTIONS space in Boston’s Financial District. Iron- to 5.8%. wood Pharmaceuticals is negotiating with • 1/101 Main Street, now quoting the highest Longfellow Partners to build a 400,000 SF• Rental rates: The market has quickly gross office rents in Cambridge at mid to headquarters at the Seaport Square project. gotten used to the higher Cambridge office high $50’s/SF, is in the process of landing rates in 2012. East Cambridge Class A the two double-floor deals of 57,000 SF • Equity’s 125-150 CambridgePark Drive asking rates are now $47–57.00/SF gross each, one of which is the CIC expansion upgrade program has led leases of 12,826 and the better Class B buildings have broken from One Broadway. SF to ICF International, 11,355 SF to Clark, into the low to mid $40s/SF. It is difficult to Hunt Ahearn & Embry, 6,884 SF to Mineral find office product in East and Mid-Cambridge • 400 Tech Square signed a slew of new deals Tree and 6,347 SF to BitSite Technologies. in the $30’s/SF gross and very little is in the following the anchor tenancy of Ragon $20’s. Rates for existing lab units range from Institute: Epizyme for 32,000 SF, Warp Drive INVESTMENT/DEVELOPMENT the high $20’s/SF NNN in Alewife to $45– Bio for 22,000 SF and Aramco Services for • The rising market has caused two longtime 55/SF NNN in East Cambridge. New Class A 32,000 SF. As we predicted One Kendall property holders to put their prize assets on lab space built from shell in East Cambridge Square reduced its vacancy to the low single the sale market this quarter: 18-28 JFK is quoted at $55–60/SF NNN with $120– digits, signing the 97,461 SF renewal/ Street in Harvard Square, a retail/residential 150/SF landlord build-out allowances. expansion of Merrimack Pharmaceuticals building, and the Fennell family’s Quest and leasing all its incubator units. That’s Diagnostics portfolio of office and lab• Vacancy rates: Total combined lab and good news for 840 Memorial Drive which will buildings along Mass Ave in Central Square. office vacancy comes in at 10.4%, slightly pick up more of the Class B lab action like The Central Square package will likely trigger lower than last quarter, but the 12.6 % the recent Cereluan 14,000 SF lease there. some development. NAI Hunneman | 303 Congress Street | Boston MA 02110 | 617.457.3400 | www.NAIHunneman.com
  • 6. Metro Boston Real Estate Market Review Q3/12 Suburban Office Market FEATURED PROPERTY CLASS A OFFICE SPACE Direct Sublease Total Average Direct Total Office Space Vacant Vacant Vacant Rental Vacancy Vacancy Submarket Inventory Space Space Space Rates (%) (%) Route 128 North 9,161,112 1,177,294 21,216 1,198,510 $23 12.9% 13.1% Route 128 Northwest 8,361,144 1,180,344 67,403 1,247,747 $23 14.1% 14.9% Route 128 West 14,520,177 1,868,427 208,564 2,076,991 $29 12.9% 14.3% Route 128 Southwest 1,478,886 76,874 25,841 102,715 $24 5.2% 6.9% Route 128 South 4,745,654 970,416 64,338 1,034,754 $23 20.4% 21.8% 285 Bear Hill Road Route 128 Loop 38,266,973 5,273,355 387,362 5,660,717 $25 13.8% 14.8% Waltham, MA 26,500 SF in the heart of the I-495 North 3,414,862 657,292 30,198 687,490 $17 19.2% 20.1% 128 Technology Market. I-495 Northwest 3,814,791 471,871 1,273 473,144 $18 12.4% 12.4% Contact Evan Gallagher at 617.457.3350 I-495 West 5,481,128 1,217,871 142,191 1,360,062 $18 22.2% 24.8% TRENDS I-495 Southwest 788,793 269,917 0 269,917 $21 34.2% 34.2%• With the widening of Middlesex Turnpike I-495 South 137,000 5,661 0 5,661 $21 4.1% 4.1% and the velocity of the Burlington market it is becoming logical that the Route 3 I-495 Loop 13,636,574 2,622,612 173,662 2,796,274 $18 19.2% 20.5% corridor will benefit and these factors will cause absorption. CLASS B OFFICE SPACE• Cummings Properties is seeking rents of Direct Sublease Total Average Direct Total $28.50 PSF for space in the TradeCenter Office Space Vacant Vacant Vacant Rental Vacancy Vacancy 128. Most of the tenants occupying the Submarket Inventory Space Space Space Rates (%) (%) building signed leases in the “high Route 128 North 8,482,963 1,053,059 36,843 1,089,902 $18 12.4% 12.8% teens/low twenties” per square foot when the facility was first marketed in 2008. Route 128 Northwest 5,647,691 860,929 134,874 995,803 $18 15.2% 17.6%• There are very few options for tenants Route 128 West 13,068,868 1,471,237 114,034 1,585,271 $22 11.3% 12.1% seeking “existing laboratory space” along Route 128 and in the Northern Suburbs. Route 128 Southwest 3,858,453 549,272 28,000 577,272 $16 14.2% 15.0% Route 128 South 5,470,400 973,315 2,747 976,062 $18 17.8% 17.8% NOTABLE TRANSACTIONS Route 128 Loop 36,528,375 4,907,812 316,498 5,224,310 $19 13.4% 14.3%• NAI Hunneman represented Spectro Energy in a 27,000 SF sublease at I-495 North 3,414,697 740,930 250 741,180 $18 21.7% 21.7% 1 Executive Drive in Chelmsford. I-495 Northwest 5,355,713 958,175 82,289 1,040,464 $17 17.9% 19.4%• NAI Hunneman represented Citizens I-495 West 6,046,674 1,394,389 111,341 1,505,730 $15 23.1% 24.9% Disability on a 43,000 SF lease at 1075 Main Street in Waltham. I-495 Southwest 1,214,928 233,745 2,365 236,110 $19 19.2% 19.4%• Sybase leased 63,000 SF at 15 Wayside I-495 South 1,374,354 198,172 0 198,172 $20 14.4% 14.4% Road in Burlington. I-495 Loop 17,406,366 3,525,411 196,245 3,721,656 $17 20.3% 21.4%• Morse Barnes-Brown leased 30,000 SF Source: CoStar, NAI Hunneman Commercial Company. Prepared: September, 2012. Rental Rates are asking rents on direct space as reported by Costar. at Third Avenue in Waltham. Disclaimer: The above data is from sources deemed to be generally reliable, but no warranty is made as to the accuracy of the data nor its usefulness for any particular purpose. NAI Hunneman | 303 Congress Street | Boston MA 02110 | 617.457.3400 | www.NAIHunneman.com
  • 7. Metro Boston Real Estate Market Review Q3/12 Industrial/Flex Market FEATURED PROPERTY INDUSTRIAL MARKET Industrial Space Vacant Vacancy Rental Submarket Inventory Space* Rate* Rate (NNN) Boston Central Core 21,168,274 1,723,103 8.1% $8.71 Route 128 North 27,155,172 1,657,377 6.1% $6.07 Route 128 Northwest 4,719,727 290,071 6.1% $5.60 Route 128 West 11,324,226 203,577 1.8% $7.04 Route 128 Southwest 11,846,043 792,852 6.7% $5.18 Route 128 South 23,376,919 2,720,118 11.6% $5.12 Route 128 Loop 78,422,087 5,663,995 7.2% $5.76 I-495 North 15,879,059 1,291,036 8.1% $4.71 I-495 Northwest 10,663,859 1,665,230 15.6% $4.38 I-495 West 15,266,937 1,648,341 10.8% $5.08 22 Willow Street I-495 Southwest 15,409,254 1,646,719 10.7% $4.59 Chelsea, MA I-495 South 13,354,320 2,382,944 17.8% $4.02 Prime Redevelopment Site I-495 Loop 70,573,429 8,634,270 12.2% $4.58 for sale or lease Metropolitan Boston 170,163,790 16,021,368 9.4% $5.64 Contact Trey Agnew at 617.457.3363 FLEX/R&D MARKET TRENDS Industrial Space Vacant Vacancy Rental Submarket Inventory Space* Rate* Rate (NNN) South Market Boston Central Core 6,928,908 604,443 8.7% $21.56• First and second quarter along with first- Route 128 North 14,026,404 1,687,023 12.0% $8.34 half of third quarter was very strong. Route 128 Northwest 9,803,467 1,643,528 16.8% $8.70 Partially due to the elections, closings have Route 128 West 7,858,421 495,014 6.3% $11.57 Route 128 Southwest 5,167,071 750,405 14.5% $9.28 digressed a bit, but activity is still positive. Route 128 South 3,474,430 537,828 15.5% $7.58 Route 128 Loop 40,329,793 5,113,798 12.7% $9.11• User/Owner markets are still a very hot item I-495 North 8,398,426 1,565,175 18.6% $8.10 because of the aggressive financing being I-495 Northwest 5,717,885 369,424 6.5% $8.07 offered by banks. I-495 West 10,907,210 2,473,082 22.7% $6.60 I-495 Southwest 3,760,329 130,655 3.5% $10.43• Walpole Park South 8 is 92% filled with only I-495 South 2,286,035 120,589 5.3% $8.24 9,700 SF available. I-495 Loop 31,069,885 4,658,925 15.0% $7.86 Metropolitan Boston 78,328,586 10,377,166 13.2% $9.72 North Market Source: CoStar, NAI Hunneman Commercial Company. Prepared: September, 2012. Rental Rates are asking rents on direct space as reported by Costar. Disclaimer: The above data is from sources deemed to be generally reliable, but no warranty is made as to the accuracy of the data nor its• Currently over 1.6 MSF available in the usefulness for any particular purpose. 128 North industrial market with a $6.00 NNN average rent. NOTABLE TRANSACTIONS • NAI Hunneman leased 28,000 SF to Cintas Corp. at 1150 Providence Hwy, Sharon.• Currently over 1.6 MSF available in the South Market • 55 Murphy Drive, Avon: 165,000 SF freezer 128 North flex market with a $8.50 NNN space sold for $47 PSF. • Plantation Products leased 378,000 SF at average rent. 35 United Drive, West Bridgewater. North Market• Handful of mid to large requirements • 84,746 SF leased at 1 Second Street in • 47 Brands leased 300,000 SF at 525 Peabody presently out in the market looking to be in Campanelli Drive, Brockton: Industrial new space by Q1-Q2 2013. 300,000 SF – 47 Brands. • 57,600 SF leased at 19 Connector Road in Andover• Well-located, first-class buildings continue • NAI Hunneman leased 48,000 SF to PSS • 88,000 SF leased at 326 Ballardvale Road to get most of the traffic. World Medical at Walpole Park South. in Wilmington NAI Hunneman | 303 Congress Street | Boston MA 02110 | 617.457.3400 | www.NAIHunneman.com
  • 8. Metro Boston Real Estate Market Review Q3/12 Investment Market FEATURED PROPERTY Metro Boston Office Buildings Year 2008 2009 2010 2011 2012 YTD Sales Volume $1,713,511,785 $1,234,194,486 $1,075,866,674 $3,620,549,942 $2,634,258,754 # of Sales 55 21 41 63 59 Median Cap Rate 6.06% 8.90% 7.33% 7.10% 6.63% Median $/SF $215 $197 $179 $173 $233 Metro Boston Retail Buildings Year 2008 2009 2010 2011 2012 YTD Lewis Wharf Sales Volume $489,204,432 $168,647,666 $365,117,501 $1,655,884,033 $582,298,572 Boston, MA # of Sales 38 16 29 45 35 Existing office condominiums and Median Cap Rate 6.69% 7.75% 7.65% 7.25% 6.75% development rights in Boston’s historic Median $/SF $406 $331 $223 $292 $268 North End Waterfront Contact Doug Jacoby at 617.457.3237 Metro Boston Industrial/R&D Year 2008 2009 2010 2011 2012 YTD TRENDS Sales Volume $522,462,247 $190,443,874 $194,286,968 $914,178,341 $524,177,849• In Boston the cap rates continue to compress especially for Class A product, # of Sales 47 19 18 45 38 and retail. Median Cap Rate 8.20% 9.23% 8.97% 8.10% 8.67%• CVS and Walgreens are trading 50 basis Median $/SF $81 $62 $83 $70 $65 points below pre first-quarter levels. Grocery- anchored retail has continued to remain hot Metro Boston Multifamily with the lack of new product coming the Year 2008 2009 2010 2011 2012 YTD market and the indifference for retailers to backfill existing vacant space existing fully Sales Volume $744,738,685 $443,040,096 $631,825,406 $1,148,016,991 $1,209,549,165 leased centers are reaping the benefits. # of Sales 34 19 29 42 59• Class A/B Office in downtown have Median Cap Rate 6.80% 6.83% 7.50% 5.24% 5.86% continued to attract low cap rates and now with the recent sales of One Network Drive, 174 & 176 Middlesex Turnpike and 1 & 3 Burlington Woods, a 97% leased Metro Boston Totals Class A set of buildings, the trend is starting Year 2008 2009 2010 2011 2012 YTD to move to 128.• Several key suburban markets including Sales Volume $3,469,917,149 $2,036,326,122 $2,267,096,549 $7,338,629,307 $4,950,284,340 Waltham and Burlington have seen large # of Sales 174 75 117 195 191 increases in their asking rents, increased Median Cap Rate 6.94% 8.18% 7.86% 6.92% 6.98% demand for Class A space with a lack of supply, and development, including Duffy Median $/SF $176 $147 $121 $134 $141 Properties spec development and Gutierrez’s Source: CoStar, NAI Hunneman Commercial Company. Prepared: September, 2012. Rental Rates are asking rents on direct space as reported by Costar. Keurig Development on South Ave all lead- Disclaimer: The above data is from sources deemed to be generally reliable, but no warranty is made as to the accuracy of the data nor its usefulness for any particular purpose. ing to an overall compression of cap rates.• Outside of the core, there is still a delta NOTABLE TRANSACTIONS • 1 & 3 Burlington Woods, Burlington: on cap rates, but well leased and located $54,000,000 ($201/PSF); Buyer: Colony • One Network Drive, Burlington $215,000,000 product is moving as seen by 5 Parkwood Realty Partners ($250/PSF); Buyer: JP Morgan Drive in Hopkinton (bought by US Realty advisors fully leased to Caliper Life Sciences) • 174 & 176 Middlesex Turnpike, Bedford: • 5 Parkwood Drive, Hopkinton: $30,100,000 and 305 Forbes Blvd, Mansfield (UBS $93,500,000 ($285/PSF); Buyer: Cole Real ($228/PSF); Buyer: US Realty Advisors Realty Investors). Estate Investments NAI Hunneman | 303 Congress Street | Boston MA 02110 | 617.457.3400 | www.NAIHunneman.com
  • 9. Metro Boston Real Estate Market Review Q3/12NAI Hunneman ContactsCorporate Chris Gotfredson Cathy Minnerly Scott Dragos Senior Vice President Executive Vice President Senior Vice PresidentStuart Pratt 617.457.3255 617.457.3334 617.457.3248CEO cgotfredson@naihunneman.com cminnerly@naihunneman.com sdragos@naihunneman.com617.457.4333spratt@naihunneman.com Greg Larsen David Gilkie Dan Collins Senior Vice President Senior Vice President Vice PresidentMike DiGiano 617.457.3321 617.457.3202 617.457.3252Executive Vice President/COO glarsen@naihunneman.com dgilkie@naihunneman.com dcollins@naihunneman.com617.457.3410mdigiano@naihunneman.com Stephen Cusano Sean Ryan Suburban Leasing Associate AssociateDavid Finnegan Steve James 617.457.3325 617.457.3357Director of Marketing Executive Vice President scusano@naihunneman.com sryan@naihunneman.com617.457.3238 617.457.3263dfinnegan@naihunneman.com Tom Egan Dan McGee sjames@naihunneman.com Associate AssociateDowntown-Cambridge Leasing James Boudrot 617.457.3326 617.457.3266 Senior Vice President tegan@naihunneman.com dmcgee@naihunneman.comJeff Becker 617.457.3328Senior Vice President jboudrot@naihunneman.com Ovar Osvold Henry Lieber617.457.3424 Associate Associatejbecker@naihunneman.com Brendan Daly 617.457.3222 617.457.3383 Vice President oosvold@naihunneman.com hlieber@naihunneman.comJon Gifford 617.457.3281Senior Vice President bdaly@naihunneman.com Gina Barroso617.457.3401 Investment Sales Associatejgifford@naihunneman.com Michael McCarthy David Ross 617.457.3261 Vice President Executive Vice President gbarroso@naihunneman.comDavid Cooney 617.457.3224 617.457.3392Vice President mmccarthy@naihunneman.com dross@naihunneman.com Robert Tito, Jr.617.457.3305 Associatedcooney@naihunneman.com Evan Gallagher Robert Tito 617.457.3355 Vice President Executive Vice President btito@naihunneman.comBonny Doorakian 617.457.3350 617.457.3231Vice President egallagher@naihunneman.com rtito@naihunneman.com Mitchell Levey617.457.3317 Associatebdoorakian@naihunneman.com Carl Christie 617.457.3227 Industrial Leasing Executive Vice President mlevey@naihunneman.comBen Sutton Trey Agnew 617.457.3394Senior Associate Executive Vice President cchristie@naihunneman.com617.457.3424 617.457.3363bsutton@naihunneman.com Doug Jacoby tagnew@naihunneman.com Senior Vice President J.P. Plunkett 617.457.3237 Executive Vice President djacoby@naihunneman.com 617.457.3230 jplunkett@naihunneman.com NAI Hunneman | 303 Congress Street | Boston MA 02110 | 617.457.3400 | www.NAIHunneman.com
  • 10. Metro Boston Real Estate Market Review Q3/12 Methodology, Definitions & Submarket MapMethodologyWe have divided the Metro Boston area into four submarkets foroffice properties: Boston, Cambridge, Route 128 and Route 495.Industrial and Flex/R&D properties are divided into three submarkets:Central Core (Boston, Cambridge, and Inner Suburbs), Route 128and Route 495.Absorption (Net)The change in occupied space in a given time period.Average Asking Rental RateRental rate as quoted from each building’s owner/managementcompany: for office space, a full-service rate was requested; for lab Direct Vacancyspace, a triple net rate was requested; for retail, a triple net rate was Space currently available for lease directly with the landlord orrequested; for industrial, a triple net rate basis. building owner.Building Class Overall VacancyClass A product is office space of steel and concrete construction, All unoccupied lease space, either direct or sublease.quality tenants, excellent amenities & premium rates. Class B productis office space with fair to good finishes and a wide range of tenants. SubleaseCap Rate Arrangement in which a tenant leases rental property to anotherThe net operating income divided by the sales price or value of a and the tenant becomes the landlord to the subtenant.property expressed as a percentage. Total Square FootageCBD Net rentable area considered available for lease; includes subleaseCentral business district. space. NAI Hunneman | 303 Congress Street | Boston MA 02110 | 617.457.3400 | www.NAIHunneman.com
  • 11. Commercial Real Estate Services, WorldwideAsia PacficCanadaEurope, Middle East and AfricaLatin America and the CaribbeanUnited States303 Congress StreetBoston MA 02110Tel 617.457.3400Fax 617.457.3268www.NAIHunneman.com Committed to Boston. Connected to the World.

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