Route 128 Commercial Real Estate Market: More Supply, Declining Rents

According to the recent market report released by Cresa Boston, the Route 128 commercial real estate market shows some signs of softening with more supply and plateauing rents.

Report Highlights

• After an almost 25 percent spike in rent between 2013 and 2015, asking rent is beginning to plateau, ending Q4 2015 with an average asking rate of $30.53 per SF.
  
  
• Highest rental rates are in Burlington and the Waltham area.

• With a rising average vacancy rate of 10.8 percent, Route 128 Cresa market expert Joe Sciolla predicts that increased sublease inventory will put a downward pressure on rents for direct space. Sublease inventory for Class A office space doubled in the second half of 2015 to 5% of the total Burlington market.
  
  
• Landlords continue to make improvements to their buildings/parks by adding new on-site amenities, including restaurants/hotels in some parks. Some landlords are also working with local governments to add round-trip shuttle bus services between Cambridge, Burlington and Bedford to Boston.
  
  
• There was some variation in vacancy rates between submarkets, with 128 North the lowest at 9.7 percent, 128 West at 10.5 percent, and 128 Northeast at 13.6 percent. There was also some variation in average asking rent between submarkets. For Class A properties, 128 West had the highest asking rate at $38.00 per SF, then 128 North at $35.00 per SF, and 128 Northeast at $26.00 per SF.
  
  
• Sciolla predicts that rents could decrease by at least 5% and possibly as high as 10% over the next 12-18 months.

The full Route 128 market report can be viewed here.

Cresa LLC, North America’s largest corporate real estate advisory firm exclusively representing tenants, is headquartered in Boston.

Cresa is the world’s largest tenant-only commercial real estate firm. In representing tenants exclusively—no landlords, no developers—Cresa provides unbiased, conflict-free advice. Integrated services cover every aspect of a real estate transaction from site selection and financing to project management and relocation services. Cresa offers clients customized solutions with more than 60 offices in 75 markets worldwide. For more information, visit www.cresa.com.