Boston Highlights Q2 2013
Content
Office Highlights
Boston . Q2 2013
Firms beginning to invest in the future and look past nearterm uncertainty
While Boston has exhibited one of the strongest recoveries to date (fourth strongest in the U.S.) and is officially in growth mode, job growth has stagnated in recent months. Unfortunately, four years post-recession, performance remains uneven. Exports continue to decline year-over-year, dampening the manufacturing sector, as Europe pulls back. And local government entities, as well as certain private firms, remain fiscally conservative in anticipation of looming spending cuts. In addition, the financial and legal sectors, which only a few quarters ago were starting to show promise, are slowing again. On the flip side, the bright spots remain in high-tech and life sciences, sectors that not only are at the heart of new space demand, but also space reconfiguration. The submarkets that are exhibiting rent growth and declines in vacancy are primarily being supported by these sectors. In addition, the housing sector is spurring growth in the Bay Area with prices beginning to recover. Home prices are anticipated to return to previous peak levels in five years. The new construction cycle in multifamily is also a growth driver in our market. Still, in the face of this murky backdrop, many firms are starting to push through the uncertainty and are making strategic decisions that will help them meet their growth objectives over time. For example, a number of firms are committing to build-to-suit projects. CEO’s are making decisions that go beyond saving money and are evaluating employee satisfaction, productivity and retention as they consider space options. Leasing activity Boston • Wayfair signed a lease to occupy 105,000 square feet at 4 Copley Place, relocating within the Back Bay from 177 Huntington Avenue. • At 500 Boylston Street, Skadden leased 48,000 square feet on the 22nd and 23rd floors, NewStar Financial leased 20,000 square feet on the 14th, and Finepoint leased 13,500 square feet on the 24th. • The Unitarian Universalist Association signed a lease-to-purchase agreement at 24 Farnsworth Street, occupying 39,000 square feet as its new headquarters. • Law firm Todd & Weld leased 25,000 square feet at One Federal Street. • At One International Place, Law firm Dechert LLP leased 25,000 square feet on the 40th and 41st floors.
Tour activity Leasing volume Rents Concessions Sales volume Construction deliveries Construction starts
Arrows represent change from prior quarter
• At 260 Franklin Street, Acadian Asset Management signed a lease for 16,000 square feet; Donnelly, Conroy & Gelhaar, LLP 7,200 square feet; and TFC Financial Management 6,800 square feet. • In the Seaport District, McGraw Hill leased 12,200 square feet at 281 Summer Street. Cambridge • Hubspot is expanding and extending the term on its existing premises at 25 First Street. They signed for a total of 119,000 square feet, expanding by approximately 61,000 square feet. • Intuit is relocating and expanding into 60,884 square feet at 150 CambridgePark Drive, coming into West Cambridge from Waltham. • Bluebirdbio has signed a lease and is relocating and expanding to 43,586 square feet at recently-delivered 150 Second Street. • Massachusetts Institute of Technology signed a lease at One Charles Park for 36,228 square feet. • EdX signed a lease for 31,700 square feet on the eighth and ninth floors at 141 Portland Street. Suburbs- South/West • Newton based TripAdvisor committed to a 280,000 square foot builtto-suit opportunity at Center 128 in Needham. They additionally leased 43, 391 square feet at 140 Kendrick Street, also in Needham. • In Natick, payroll processing company ADP signed a six-year lease for 52,051 square feet at 2 Vision Drive . • At 1100 Winter Street in Waltham, AMAG Pharmaceuticals leased 32,217 square feet, while GPS software company Fleetmatics leased 27,598 square feet. • In Quincy, online marketing firm Propel Marketing leased 28,700 square feet at 108 Myrtle Street. • Packaging materials company Avery Dennison is relocating into 22,181 square feet at 1700 West Park Drive in Westborough. • Regus signed a lease at 3 Allied Drive in Dedham for 14,100 square feet.
Jones Lang LaSalle • Boston Office Highlights • Q2 2013 2
• In Marlborough, IT healthcare solutions company Park Place International relocated their headquarters to 100 Crowley Drive, having signed for 17,849 square feet. Suburbs- North • iBasis renewed for 54,442 square feet at 10 & 20 Second Avenue in Burlington. • Mettler Toledo relocated and expanded into 50,000 square feet at 900 Middlesex Turnpike in Billerica. • Taxware International is relocating to 200 Ballardvale Street in Wilmington, having signed a 49,261-square-foot lease. • Lightower Fiber Networks renewed and expanded into a total of 46,695 square feet at 80 Central Street in Boxborough. • Two leases were completed at 2 Technology Park Drive in Westford: eHealth Insurance is relocating to 20,000 square feet and SynQor is opening an additional branch for 10,000 square feet. • Soundbite Communications signed a short-term renewal for 24,000 square feet at 22 Crosby Drive in Bedford. Tenants in the market Boston • Currently there are 182 active requirements totaling 3.8 million square feet in Boston CBD, with a median requirement of 7,000 square feet. • Seven firms are seeking over 100,000 square feet, including Goulston & Storrs, AIG and Sonos. Cambridge • Today, Cambridge has 62 active requirements totaling over 1.2 million square feet. Suburbs • The Greater Boston suburbs has 284 active requirements totaling over 7.6 million square feet. • The largest requirements include Osram Sylvania and Dunkin Brands. Sales activity Boston • TIAA-CREF purchased 40 Broad Street, a 286,159-square-foot, Class B building, for $110.0 million, or $384.40 per square foot. • In the Seaport District, DivCoWest purchased 327 Summer Street, 10 Necco Street, 319-321 A Street and 337 Summer Street for a total of $53.0 million from the Archon Group. • RREEF America LLC bought 45 Milk Street, a 68,829 square foot, Class B building, from Anglo Irish Bank for $21.0 million, or $305.10 per square foot. Cambridge • BioMed Realty Trust purchased 320 Charles Street in East Cambridge from Belmont Capital for $52.0 million or $523 per square foot. The 99,500-square-foot lab and office building is currently leased to The Whitehead Institute. Suburbs • Hines completed their purchase of Riverside Center at 275 Grove street in Newton from The Blackstone Group. The 484,710-squarefoot property sold for $197.2 million, or $385 per square foot.
• Taurus purchased One Newton Place (172,179 square feet) in Newton from TA Associates for $34.0 million, or $197 per square foot. • The Arsenal on the Charles portfolio in Watertown, consisting of 11 properties at 311 Arsenal Street, was purchased by Athena Health to serve as its headquarters for $168.5 million from Harvard University. • Rockwood Capital, LLC purchased 275 and 266 Second Avenue in Waltham from The John Hancock Life & Health Insurance company. The 201,565-square-foot, Class B pair of buildings sold for $34.5 million or $171 per square foot. • National Development, Charles River Realty, and AEW Capital Partners acquired New England Executive Park in Burlington from Equity Office Properties. The 1.1 million-square-foot park traded for $216.0 million, or $209 per square foot. • 200 Innerbelt Road in Somerville sold for $33.4 million, or $179 per square foot. Bulgroup Properties purchased that 185,326-squarefoot, Class A office building from Foulger-Pratt. Construction activity Boston • Arnold Worldwide signed a build-to-suit lease for 125,000 square feet at the Millennium Tower/Burnham Building complex right at the heart of Downtown Crossing. • PWC entered a build-to-suit agreement for 300,000 square feet of Skanska’s parcel L1 development in the Seaport District, relocating from 125 High Street in the Financial District. Cambridge • There is currently 2.5 million square feet under construction in Cambridge, where 89.9 percent is pre-leased. • Further development is on the horizon. The State’s Division of Capital Asset Management has selected finalist Leggat McCall properties to redevelop the Edward J. Sullivan Courthouse at 40 Thorndike Street. Leggat McCall speculatively plans to redevelop the 23-story, 519,000-square-foot courthouse. Suburbs • Federal Realty broke ground on a speculative office building at 350 Artisan Way at the Assembly Row development in Somerville. The building is expected to deliver in 2014 and will comprise 100,000 square feet of office and an additional 30,000 square feet of retail. • The construction of a 120,000-square-foot office building at 1265 Main Street in Waltham, the former Polaroid site, remains underway and is expected to deliver at an unspecified point in 2014. • Construction commenced at New Quincy Center with the groundbreaking of the Merchants Row housing and retail complex. This $1.6 billion dollar project will eventually bring 3.5 million square feet of urban redevelopment to the city of Quincy.
©2013 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval system without prior written permission of Jones Lang LaSalle. The information contained in this document has been compiled from sources believed to be reliable. Jones Lang LaSalle or any of their affiliates accept no liability or responsibility for the accuracy or completeness of the information contained herein and no reliance should be placed on the information contained in this document.
Boston . Q2 2013
Firms beginning to invest in the future and look past nearterm uncertainty
While Boston has exhibited one of the strongest recoveries to date (fourth strongest in the U.S.) and is officially in growth mode, job growth has stagnated in recent months. Unfortunately, four years post-recession, performance remains uneven. Exports continue to decline year-over-year, dampening the manufacturing sector, as Europe pulls back. And local government entities, as well as certain private firms, remain fiscally conservative in anticipation of looming spending cuts. In addition, the financial and legal sectors, which only a few quarters ago were starting to show promise, are slowing again. On the flip side, the bright spots remain in high-tech and life sciences, sectors that not only are at the heart of new space demand, but also space reconfiguration. The submarkets that are exhibiting rent growth and declines in vacancy are primarily being supported by these sectors. In addition, the housing sector is spurring growth in the Bay Area with prices beginning to recover. Home prices are anticipated to return to previous peak levels in five years. The new construction cycle in multifamily is also a growth driver in our market. Still, in the face of this murky backdrop, many firms are starting to push through the uncertainty and are making strategic decisions that will help them meet their growth objectives over time. For example, a number of firms are committing to build-to-suit projects. CEO’s are making decisions that go beyond saving money and are evaluating employee satisfaction, productivity and retention as they consider space options. Leasing activity Boston • Wayfair signed a lease to occupy 105,000 square feet at 4 Copley Place, relocating within the Back Bay from 177 Huntington Avenue. • At 500 Boylston Street, Skadden leased 48,000 square feet on the 22nd and 23rd floors, NewStar Financial leased 20,000 square feet on the 14th, and Finepoint leased 13,500 square feet on the 24th. • The Unitarian Universalist Association signed a lease-to-purchase agreement at 24 Farnsworth Street, occupying 39,000 square feet as its new headquarters. • Law firm Todd & Weld leased 25,000 square feet at One Federal Street. • At One International Place, Law firm Dechert LLP leased 25,000 square feet on the 40th and 41st floors.
Tour activity Leasing volume Rents Concessions Sales volume Construction deliveries Construction starts
Arrows represent change from prior quarter
• At 260 Franklin Street, Acadian Asset Management signed a lease for 16,000 square feet; Donnelly, Conroy & Gelhaar, LLP 7,200 square feet; and TFC Financial Management 6,800 square feet. • In the Seaport District, McGraw Hill leased 12,200 square feet at 281 Summer Street. Cambridge • Hubspot is expanding and extending the term on its existing premises at 25 First Street. They signed for a total of 119,000 square feet, expanding by approximately 61,000 square feet. • Intuit is relocating and expanding into 60,884 square feet at 150 CambridgePark Drive, coming into West Cambridge from Waltham. • Bluebirdbio has signed a lease and is relocating and expanding to 43,586 square feet at recently-delivered 150 Second Street. • Massachusetts Institute of Technology signed a lease at One Charles Park for 36,228 square feet. • EdX signed a lease for 31,700 square feet on the eighth and ninth floors at 141 Portland Street. Suburbs- South/West • Newton based TripAdvisor committed to a 280,000 square foot builtto-suit opportunity at Center 128 in Needham. They additionally leased 43, 391 square feet at 140 Kendrick Street, also in Needham. • In Natick, payroll processing company ADP signed a six-year lease for 52,051 square feet at 2 Vision Drive . • At 1100 Winter Street in Waltham, AMAG Pharmaceuticals leased 32,217 square feet, while GPS software company Fleetmatics leased 27,598 square feet. • In Quincy, online marketing firm Propel Marketing leased 28,700 square feet at 108 Myrtle Street. • Packaging materials company Avery Dennison is relocating into 22,181 square feet at 1700 West Park Drive in Westborough. • Regus signed a lease at 3 Allied Drive in Dedham for 14,100 square feet.
Jones Lang LaSalle • Boston Office Highlights • Q2 2013 2
• In Marlborough, IT healthcare solutions company Park Place International relocated their headquarters to 100 Crowley Drive, having signed for 17,849 square feet. Suburbs- North • iBasis renewed for 54,442 square feet at 10 & 20 Second Avenue in Burlington. • Mettler Toledo relocated and expanded into 50,000 square feet at 900 Middlesex Turnpike in Billerica. • Taxware International is relocating to 200 Ballardvale Street in Wilmington, having signed a 49,261-square-foot lease. • Lightower Fiber Networks renewed and expanded into a total of 46,695 square feet at 80 Central Street in Boxborough. • Two leases were completed at 2 Technology Park Drive in Westford: eHealth Insurance is relocating to 20,000 square feet and SynQor is opening an additional branch for 10,000 square feet. • Soundbite Communications signed a short-term renewal for 24,000 square feet at 22 Crosby Drive in Bedford. Tenants in the market Boston • Currently there are 182 active requirements totaling 3.8 million square feet in Boston CBD, with a median requirement of 7,000 square feet. • Seven firms are seeking over 100,000 square feet, including Goulston & Storrs, AIG and Sonos. Cambridge • Today, Cambridge has 62 active requirements totaling over 1.2 million square feet. Suburbs • The Greater Boston suburbs has 284 active requirements totaling over 7.6 million square feet. • The largest requirements include Osram Sylvania and Dunkin Brands. Sales activity Boston • TIAA-CREF purchased 40 Broad Street, a 286,159-square-foot, Class B building, for $110.0 million, or $384.40 per square foot. • In the Seaport District, DivCoWest purchased 327 Summer Street, 10 Necco Street, 319-321 A Street and 337 Summer Street for a total of $53.0 million from the Archon Group. • RREEF America LLC bought 45 Milk Street, a 68,829 square foot, Class B building, from Anglo Irish Bank for $21.0 million, or $305.10 per square foot. Cambridge • BioMed Realty Trust purchased 320 Charles Street in East Cambridge from Belmont Capital for $52.0 million or $523 per square foot. The 99,500-square-foot lab and office building is currently leased to The Whitehead Institute. Suburbs • Hines completed their purchase of Riverside Center at 275 Grove street in Newton from The Blackstone Group. The 484,710-squarefoot property sold for $197.2 million, or $385 per square foot.
• Taurus purchased One Newton Place (172,179 square feet) in Newton from TA Associates for $34.0 million, or $197 per square foot. • The Arsenal on the Charles portfolio in Watertown, consisting of 11 properties at 311 Arsenal Street, was purchased by Athena Health to serve as its headquarters for $168.5 million from Harvard University. • Rockwood Capital, LLC purchased 275 and 266 Second Avenue in Waltham from The John Hancock Life & Health Insurance company. The 201,565-square-foot, Class B pair of buildings sold for $34.5 million or $171 per square foot. • National Development, Charles River Realty, and AEW Capital Partners acquired New England Executive Park in Burlington from Equity Office Properties. The 1.1 million-square-foot park traded for $216.0 million, or $209 per square foot. • 200 Innerbelt Road in Somerville sold for $33.4 million, or $179 per square foot. Bulgroup Properties purchased that 185,326-squarefoot, Class A office building from Foulger-Pratt. Construction activity Boston • Arnold Worldwide signed a build-to-suit lease for 125,000 square feet at the Millennium Tower/Burnham Building complex right at the heart of Downtown Crossing. • PWC entered a build-to-suit agreement for 300,000 square feet of Skanska’s parcel L1 development in the Seaport District, relocating from 125 High Street in the Financial District. Cambridge • There is currently 2.5 million square feet under construction in Cambridge, where 89.9 percent is pre-leased. • Further development is on the horizon. The State’s Division of Capital Asset Management has selected finalist Leggat McCall properties to redevelop the Edward J. Sullivan Courthouse at 40 Thorndike Street. Leggat McCall speculatively plans to redevelop the 23-story, 519,000-square-foot courthouse. Suburbs • Federal Realty broke ground on a speculative office building at 350 Artisan Way at the Assembly Row development in Somerville. The building is expected to deliver in 2014 and will comprise 100,000 square feet of office and an additional 30,000 square feet of retail. • The construction of a 120,000-square-foot office building at 1265 Main Street in Waltham, the former Polaroid site, remains underway and is expected to deliver at an unspecified point in 2014. • Construction commenced at New Quincy Center with the groundbreaking of the Merchants Row housing and retail complex. This $1.6 billion dollar project will eventually bring 3.5 million square feet of urban redevelopment to the city of Quincy.
©2013 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval system without prior written permission of Jones Lang LaSalle. The information contained in this document has been compiled from sources believed to be reliable. Jones Lang LaSalle or any of their affiliates accept no liability or responsibility for the accuracy or completeness of the information contained herein and no reliance should be placed on the information contained in this document.
