Boston, an historic city with a tightly woven culture, has an economy firmly set in the present, if not the future, fueled by innovation and collaboration in advanced technology, science and education. The Massachusetts capital and largest city, Boston is the educational, cultural and economic hub of New England. Greater Boston is the 10th-largest metropolitan area in the United States, with more than 4.5 million residents. The region ranks among the 10 largest economies in the U.S. and 15 largest in the world.
Reflecting the strength of Boston’s healthcare and education sectors, the city’s top three employers are Massachusetts General Hospital, Brigham and Women’s Hospital, and Boston University. Projections indicate that healthcare and education could make up 27% of Boston’s job market by 2014, largely due to the sectors’ continued growth during recessionary periods. Accordingly, a significant portion of Boston’s commercial real estate is owned by institutional investors in the two sectors.
Attracted by the region’s highly educated workforce, technology (including information technology, medical devices, biotechnology, genetics and clean technology) is another source of strength. Companies like Biogen Idec and Genzyme maintain headquarters in Cambridge, the biotech and life sciences hub of New England.
Financial and legal services companies make up the majority of Boston’s central business district. Serving insurance giants such as John Hancock and Liberty Mutual, the city is also home to Fidelity Investments, State Street Global, and Wellington Management.
Greater Boston’s office market comprises more than 153 million square feet. Demand is traditionally highest in downtown Boston, and in the western and northern suburbs. Downtown Boston’s Back Bay and Financial District are home to some of the country’s top financial and legal firms such as Fidelity Investments, Wellington Management, State Street, Ropes & Gray, State Street Bank, Bank of America, Brown Brothers Harriman, and Goodwin Procter. The suburbs host prominent national companies like Reebok, VistaPrint, Bose, TJX, and Arbella Mutual Insurance.
The retail market is focused on high-end product with great co-tenancies. Dominant retail markets include downtown Boston’s Back Bay submarket, as well as suburban hubs such as Framingham/Natick, Burlington/Woburn, and Route 1 South. Retailers with less than 5,000 square feet comprise the largest share of the market and traditionally experience the highest vacancy rates. In contrast, big-box retailers with 100,000 square feet or more account for the smallest share of the market and have the lowest vacancy rates.
The industrial market in the metro Boston area contains more than 303 million square feet. It can be generally characterized as a stable, low-volatility market. High land values and stiff environmental and entitlement regulations create few incentives to develop new industrial product. In fact, existing supply faces erosion from upgraded adaptive reuse in Boston’s densely developed inner suburban markets.
The Boston commercial real estate market has proven resilient during both the 2002 and 2008 recessions. Its innovation-driven economy is diversified, built upon the four pillars of education, healthcare science, technology and finance. Not surprisingly, Boston enjoys an elevated status as one of the top commercial real estate investment markets in the country. Both foreign and domestic institutional real estate investors view a presence in the Boston market as essential to a well-diversified portfolio positioned for both stability and growth.
Avison Young entered the Boston market in late 2010 by employing the same innovation and creativity that drives Massachusetts’s diverse economy. Avison Young’s Boston office has developed organically by cultivating a range of services in brokerage, asset management, project management and capital markets. Locally, Avison Young represents more than 5 million square feet of space. As the hub of Avison Young’s northeast expansion, Boston often partners with the firm’s other U.S. and Canadian offices on multi-market projects.