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Boston Office market predictions

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An interesting slant on the Boston office market. If this is true, we should see lots of construction over the next 5 years.

Firm Insists City Market is on Rebound

By Naomi Grossman

Last updated: Nov 25, 2003 09:34AM

BOSTON-Despite the fact that most industry analysts insist that the city's office market is at its lowest point and still needs a few quarters to recover, NAI Hunneman, a locally based commercial real estate services firm, contends that all the signs of the resurgence that characterized the city from 1993 to 2000 are in place now.

In fact, according to James J. Adams, executive vice president of NAI Hunneman, commercial tenants waiting to strike a deal at the bottom of the market are too late. The firm demonstrates that gross demand for all categories of office space exceeds three million sf and, for the first time since 2000, gross demand exceeds gross occupied space. The result, it predicts, will be at least 600,000 sf of net absorption within the next 18 months.

Additionally, the city's "premier market" has a current vacancy of only 8.9%, compared to a 12.4% rate for the market as a whole, indicating that the stratification of the market continues. Furthermore, the rate for view space within the premier market stands at 5%.

Another powerful indicator is the independent job growth forecasts which demonstrate a need for an additional 3.9 million sf to accommodate employment in the city through 2008. The firm points out that even if the proposed developments at Fan Pier, Russia Wharf, 650 Atlantic Ave., World Trade Center and 888 Boylston St. deliver space before 2008, market vacancy in 2008 would register a still low 5.6%.

Finally, the firm notes that immediate evidence of the market's rebound is apparent in the July to October 2003 activity. The city firms signed leases in excess of 1.3 million sf resulting in net growth in occupied space of 200,000 sf. "While tenants still have good options in the market," the firm concludes, "time will be increasingly of the essence. The Boston office market is back."

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Excuse me while I get a napkin, I seem to be drooling! ;)

I hope this article is right. Boston is finally developing a skyline that is quite impressive and is generally building them in a much more attractive manner.

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This is good news. Generally speaking, when Class 'A' office space is low (even if overall vacancy is higher) there is a good chance you will see construction since most new towers are Class A space and targeted at those markets. (or at least this is how I understand it). More towers, more towers, more towers.

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