Up or down? Suburban office sales trends in greater Boston 2019-2020

Jeremy Cyrier: (00:00)
Where is the suburban office market around Boston going to wrap up in 2019 and head end of 2020? So one of the things that we look at, we track the market cycle, and we track data going back to 2006. And so what we’ve done today is we’ve taken this information and rolled it up, so we can share with you kind of what’s happening. So here’s the bottom line.

Jeremy Cyrier: (00:21)
Suburban office property, between $1 and $20 million is mainly steady as she goes. There’s not anything crazy going on, on the high end or low end of the market. Dr. Glenn Mueller, whose market cycle data reports on the Boston MSA, shows us that the office market is in mid expansion. What that means is that the market is characterized primarily by rank growth and possibly movement into a phase of rapid rental appreciation, new construction.

Jeremy Cyrier: (00:50)
Although we’re not really seeing that in the suburbs, we’ve seen it in Boston. This has been primarily characteristic of Boston as an urban office cycle, where you’ve seen a lot of new construction. But in the suburbs, 128, 495 and beyond, not a lot of new construction happening, unless you’re in the 128 beltway around Burlington, Newton and Lexington.

Jeremy Cyrier: (01:12)
So what are we seeing? Well, long-term average for office property, between $1 and $20 million, from 2006 to 2019 has been about 96 deals per year. We’ve been above that long-term average since 2014, 2017 being the highest volume year with 128 sales. 2019, we’re on track right now to end the year around 113 trades. So what that means is that we’re pretty much steady as she goes, but we’re not really seeing any explosive growth. That may come in the next market cycle, as the millennials start to move into the suburbs and look for employment closer to home, where they want to avoid traffic headed into Boston. So that’s a possibility.

Jeremy Cyrier: (02:00)
We are seeing some velocity in office employment slow down a little bit, compared to the national average. I don’t see that as alarming, given our unemployment rate in Massachusetts being at historic lows.

Jeremy Cyrier: (02:13)
So all-in-all, the office property market for the suburbs around Boston, steady as she goes. I don’t see any warning signs at this point of any issues, but I also don’t see any rapid rent appreciation coming.

Jeremy Cyrier: (02:26)
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