Boston has recovered approximately 80% of lost jobs to-date, almost twice the pace of recovery being exhibited at the national level. Interestingly enough, it is not the jobs that were lost that are being created since the sectors that exhibited a large portion of the cuts like financial services have yet to turn the corner. Even with job growth, there are various dynamics in today’s real estate market that drive whether or not a firm needs additional space to account for additional headcount.

On one side of the spectrum are the firms that are growing organically and taking up more space. On the other are firms that may be adding headcount but rightsizing their footprint to be more efficient. These two dynamics are impacting fundamentals. I would even argue that the space that is being put on the market due to firms rightsizing is today’s version of “new supply.”

Still, demand outpaced supply this quarter as Greater Boston fundamentals continued to improve in the third quarter with the vacancy rate dropping 30 basis points over last year and asking rents rising 1.4 percent over the same period. The bright spot of this quarter however is the Class B segment seeing 3.1% rent growth in Greater Boston compared to 0.4% in the class A segment. This is likely due to the organic growth being seen in high tech/life science firms in Cambridge, the Seaport and beyond, and the continued spillover demand into neighboring areas and suburbs from those segments. Downtown, the Seaport District continued to display strength but the Class B segment in the Financial District demonstrated a great bounce with rents jumping 8%.

The availability rate rose 10 basis points which speaks to tenants that are making sublease space available or notifying the market that they will have space available in the future. 

-Ben

from Ben Heller
Executive Vice President
Jones Lang LaSalle

The 17^th annual United Way Real Estate and Building Industry campaign is in full swing. We recently kicked off Jones Lang LaSalle’s fundraising effort in our Boston office during which Gabrielle Vacheresse and Nilaya Montalvo from Homes for Families spoke movingly about their mission and how the United Way makes it possible for them to succeed. Gabrielle was a recipient of Homes for Families services and went on to work for the agency.

The United Way is a long-standing and important cause to our firm. We have participated for over 30 years, and my colleagues have once again responded in earnest. As this year’s chairman, I am proud to report that after just one week two-thirds of my Boston office brethren have already donated. We are aiming to break our record, and I challenge all of my industry brethren to do the same.

On October 28 Boston Properties’ Mort Zuckerman will address our top real estate and building industry companies at the annual United Way leadership breakfast. Gerald Blakely and the late Ed Linde will be honored for their lifetime of commitment to our community. The event gives Mort an opportunity to honor his great friend and colleague. Ed’s legacy includes the advancement of organizations including United Way, Beth Israel Hospital, the Boston Symphony Orchestra, and the Museum of Fine Arts.

The event always attracts a veritable who’s who of real estate professionals. I encourage you to buy your tickets now. They’re available at http://supportunitedway.org/realestate17. Thanks to our many donors and vendors for their participation and support.  

 - Ben