A few years ago, the I-495 office market was commonly described as a disaster. Today, the area is well on its way to a full recovery. The rebound can be partially attributed to the fact that the Route 128 office market along with those in Boston and Cambridge have priced out all sorts of companies. As a result, the interstate’s belt has become quite attractive for business of all sizes thanks to its affordability and abundance of available space.
Though the I-495 office market has had its share of challenges over the past decade, its recent commercial real estate recovery is worth analyzing. Today, there is considerable demand for office space along the 495 beltway yet the market is still in rather rough shape when compared to downtown Boston and Cambridge. History shows that the I-495 office market is typically the last area of the general Boston office market to experience a recovery following a recession. Real estate honchos typically divide the I-495 office market into Metrowest, north and south sub-markets. Each sub-market has experienced a drawn out recovery due to the overarching trend of businesses flocking to highly coveted urban paces. However, the I-495 office market is back and some say it will soon be better than ever.
When analyzing the greater Boston office market, most experts take a close look at vacancy rates and rent cost per square foot. All in all, the vacancy rate in Boston is a mere 7.1 percent. The rents are averaging right around $46 per square foot. Cambridge is really excelling with a 4.3 percent vacancy rate and an average of $55 per square foot. Across Route 128, office vacancy rates have settled between 8 and 12 percent with rents of $20 to $30 per square foot. The I-495 office market is comparatively weak yet it is trending in the right direction. Its vacancy rate sits at 7.9 percent, while average rents are about $33 per square foot. The 495’s Metrowest sub-market has average rents a bit below $20 and a relatively high vacancy rate of 17.6 percent. However, this vacancy rate should be viewed as a success as it is a decrease from the previous rate of 19.4 percent as identified in the same quarter of last year. Two years ago, the I-495 office market had an even higher vacancy rate of 21.5 percent. In the aftermath of the recession, there was a shocking 30 percent vacancy rate throughout the I-495 office market.
It is clear that the I-495 office market is recovering, albeit a bit more slowly than surrounding spaces. This rebound seems to be occurring in pockets, with plenty of new tenants flocking to the Metrowest and north sub-markets. Sales have spiked right alongside with leases. A 193,000 square foot Westborough facility at 900 West Park Drive was recently purchased by eClinicalWorks for $21.5 million. In the second quarter of 2015, Signature Healthcare Liability purchased a 78,000 square foot Westborough property located at 300 Friberg Parkway for $6.2 million. Local real estate experts anticipate leases and purchases throughout the I-495 office market to increase as time marches forward, propelling the area back to its pre-recession occupancy and rent levels.
If you would like more information regarding office buildings available in the greater Boston market, contact Jeremy Cyrier at jeremy@mansardcre.com or by phone at 617-674-2043.