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We all want to know where the commercial real estate market’s headed. The problem is we don’t the future. In this video, Jeremy Cyrier, CCIM walks through pricing trends, dollar volume and year over year comparisons for the greater Boston commercial real estate market so that you can sell your high value commercial property with confidence.
So where is the greater Boston commercial real estate market going to end in 2019?
Great question. So one of the things we do here at MANSARD, where we help owners find the right buyers for their high value commercial properties, is we track three counties: Rockingham, Essex, and Middlesex counties, which are west and north of Boston. The reason we do that is because those three counties, we find across the 80 towns that are included in them, share a very similar socioeconomic fabric.
Compared to last year, 2018 was really a record year for the greater Boston commercial real estate market.
We saw about $1.728 billion in volume, in the one to $20 million market, so record setter. Over the last 12 years, since 2006 to 2018, highest volume year to date. So 2019, where does that put us? Currently, on an annualized basis, we’re looking at ending the year about 17% over the long-term average. So that means that we’re above where the market typically trades on a long-term average since 2006, but we’re not headed for a record year this year, compared to 2018. In fact, this time last year, in 2018, we were at 443 sales, this time, we’re at 373. So what that tells us is the market slowed a little bit from last year, but the dollar values are still high. In fact, we’re at about $1.2 billion in trades.
What does this mean for retail, office, flex, and industrial in the greater Boston commercial real estate market?
Well, office across those three counties, between one to $20 million is trading about 5% over its long-term average right now. In fact, that’s down from 2018, which was showing an average price per square foot at $152 a foot. We’re currently at about 113, does that mean the office market is correcting or softening? I don’t believe so, I think it’s too early to tell. There are some low basis trades in the volume that could be contributing to those numbers, so we’ll need to see over the next couple of months how that shakes out.
Industrial, however, if you’re reading the press, you’re seeing that that’s a very strong sector.
In fact, it’s 43% over its long-term average. This is the best industrial market Boston’s probably ever seen. Retail, 19% over its long-term average. In terms of value and flex, 25% over. So what does this all mean? How does it roll up? Well, with the feds lowering interest rates this year, I believe they’ve protracted the cycle, so we’re definitely in a mature phase of the cycle, so we’re still seeing high volume, but I am not seeing rapid appreciation this year. What I am seeing are very high values, a lot of investors looking for good deals, smart cash flows, long-term holds, but deals are still around. There’s still great fundamentals of the market, and we’re seeing the suburban markets still trade very actively.
I appreciate your checking us out. If you want to follow our greater Boston commercial real estate market updates, you can subscribe to our channel right here at YouTube or request a consultation at (617) 674-2043. Thank you.
Sales trends to watch in the Boston commercial real estate market: https://masscommercialproperties.com/boston-commercial-real-estate-market-sales-trends/
In this video, Jeremy Cyrier, CCIM reviews the Rockingham, Middlesex and Essex County market in Massachusetts and New Hampshire, which includes the following towns: