Economic Recovery Continues in Boston
Boston's commercial market recovered rapidly during 2014. Not long ago there was serious doubt about industrial recovery. Unemployment grew with business layoffs and empty office, retail and industrial spaces. Growth began increasing in the apartment sector about 2010, centralizing the real estate economic recovery. This has stabilized the apartment vacancy rate at about 4%.
There is a slow recovery in the office market. In the Financial District of Boston, professional and financial companies account for the largest portion of office demand. The vacancy rate within the District ended 2013 at 9.6%. High tech and bio office industrial space have signed new leases for as much as $60 per sq. ft. Even though this is an increase in rental costs, it has actually helped new development and company relocation into Class A space in the business area.
Commercial vacancy rates in the suburban office market depend on which beltway leads to the property. The vacancies range from 23% to 12%. Suburban office vacancies will decline as the economy strengthens and buildings compete for tenants. Mid- office market listings have increased rental rates per square foot as more tenants compete for space.
Last year, the retail market ended with vacancies in the low end of major national markets at 6.6%. Suburban areas around Boston were slightly higher. Some large lease signings late in 2013 kept the suburban rate close to the national average. Overall the Boston market remained in the Top 10 Retail Markets with rents raising an average of 1.5%. In 2014 real estate is expected to strengthen within high end shopping areas having vacancy rates continue to lower. A net absorption of space in the metro market will deliver approximately 2 million square feet of newly constructed retail space bringing vacancy rates within 5%. Click here for currently available office space in Boston, MA.
After the market down-turn in the early 1990s, Boston enjoyed increased employment, an improving office market, gains in residential real estate, and strong sales. The local economy took a hit after 9/11 in financial services, the technology sector and tourism. Tourism especially has regained most of the ground lost at that time. Education and health care services basically remained stable. Manufacturing maintains an important economic sector. Boston is currently considered one of the top places in the United States to do business. Major industries such as high technology, medicine, research and development, finance, tourism, commercial fishing, education, food processing, printing and publishing, and government services have all established there.
Continuing Industrial Changes
Boston originally became a trade center known for processing wool and manufacturing clothing, textiles, leather goods and shoes. These forms of manufacturing continue to be significant contributors to its economy. Many companies have expanded into renovated older buildings and new construction specific to their needs.
Job growth has shifted from labor intensive manufacturing to technology and employment in the service industries. Office and industrial space is filled mostly with financial, professional and business services, defense contractors, educational and medical institutions, and high technology.
As one of the foremost fishing ports in the United States, Boston cares for more than two million pounds of fish annually. This necessitates spaces for food storage, processing, and shipping industries. Woolen mills still utilize large square footage caring for this long time market. Small and large printing operations within the metropolitan area employ thousands. Several national magazines, technical journals, Christian Science publications and scholarly documents are produced locally. One of the largest - and the oldest literary publication in America - is the Atlantic Monthly which continues to be published in Boston. Production of chemicals, machinery, metals, rubber products, medical and navigational instruments, clothing manufacture, computers and software, missiles and their guidance systems, ships, textiles, shoes and boots also utilize industrial space in the city and its suburbs.
Boston is home to many municipal and state employers. They inhabit a large percentage of the office space within the city. Multiple universities and technical schools are located in the Boston environs. Office space is in high demand but can still be found at reasonable prices in line with other cities of its size Financial, educational and medical services, along with professional and business industries tend to group within the city limits. The financial district houses major banks: Fleet Bank, Bank of America, etc. Insurance firms, such as John Hancock, and Fidelity Investments and other investment firms utilize space in this sector. The suburban economy specializes more in high technology and defense services.
The Office of Business Development provides resources and support services - including financial assistance and referral services to site finding and business façade improvement services - to help small business development. Local Development Corporation provides loans and Boston's Industrial Development Financing Authority can issue bonds for the capital needs of small and large businesses. ReStore Boston supports the renovation of store fronts with loans and grants, providing architectural assistance when requested. This agency also gives businesses a free "Commercial Space for Lease" finding service.