{"id":1004649173,"date":"2023-03-24T07:04:47","date_gmt":"2023-03-24T15:04:47","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004649173"},"modified":"2023-04-05T22:33:06","modified_gmt":"2023-04-06T06:33:06","slug":"market-report-boston-leads-us-office-pipeline","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/market-report-boston-leads-us-office-pipeline\/","title":{"rendered":"Market Report: Boston Leads US Office Pipeline"},"content":{"rendered":"
\"Boston<\/a>

Image by Sean Pavone\/iStockphoto.com<\/em><\/p><\/div>\n

Since the pandemic shook up the office sector, most markets have been struggling with absorption of new supply. As vacancy rates keep rising, the national office pipeline has been gradually deflating.<\/p>\n

Boston is one of the few markets that seem to have come out of the past few years\u2019 hurdles on a positive note. The metro now holds the largest under-construction office supply in the nation, surpassing Manhattan. Backed by a strong university hub, the city is one of the biggest centers for life science and research, bolstering the need for lab office space.<\/p>\n

As of January, Boston\u2019s office pipeline comprised 12.9 million square feet of under-construction space, representing 5.4 percent of the metro\u2019s total stock, according to CommercialEdge<\/strong> data. At that point in time, Manhattan\u2019s pipeline had shrunk to 9.9 million square feet, with Dallas (7.4 million square feet), Austin (6.7 million square feet) and San Francisco (6.5 million square feet)\u2014the top five markets by total square footage under construction\u2014making up more than a quarter of all new supply in the U.S.<\/p>\n

Boston\u2019s share of the national office pipeline has been increasing steadily since before the pandemic: In January 2020, under-construction product in Boston accounted for 6.9 percent of the national stock and 15 percent of total office space in the making in gateway cities. By 2023, these figures had ballooned to 10.5 and 26.8 percent.<\/p>\n

More than half of Boston\u2019s office pipeline is life science space<\/h2>\n

As of January, life science buildings amounted to 13.7 percent of Boston\u2019s total existing office supply. By comparison, the national rate was 2.6 percent, while San Diego\u2019s rate\u2014another major life science hub\u2014reached 12.1 percent. In the first month of 2023, Boston\u2019s office market saw 9.9 million square feet of lab space in the making, representing a whopping 54.8 percent of total office space under construction. Nationally, 16.4 percent of the January under-construction office pipeline was life science space, CommercialEdge data shows.<\/p>\n

\"Rendering<\/a>

Fenway Center. Image courtesy of IQHQ<\/em><\/p><\/div>\n

In April 2021, life sciences REIT IQHQ Inc.<\/strong> and local co-developer Meredith Management<\/strong> broke ground on one of the largest office projects still under construction in Boston, dubbed Fenway Center<\/a>. At full buildout, the $1 billion campus will comprise two towers totaling 960,000 square feet of lab space and will aim for LEED Gold certification.<\/p>\n

One Congress at Bulfinch Crossing, another large-scale office development for Boston, is nearing completion in the heart of Downtown. Developed by a joint venture of Carr Properties<\/strong>, National Real Estate Advisors<\/strong> and The HYM Investment Group<\/strong>, the 44-story tower will yield nearly 978,000 square feet of premier office space.<\/p>\n

Boston was a magnet for construction starts in 2022<\/h2>\n

While in other gateway cities construction starts slowed in 2022, in Boston numerous office projects gained financing and started rising. Last year, the city was the U.S. market with the most office starts, totaling 7.2 million square feet. Among newly commenced office space, 73 percent was within the life science sector. In Manhattan, the nation\u2019s biggest office market, only 1.6 million square feet of new product broke ground last year.<\/p>\n

\"Rendering<\/a>

FORUM at 60 Guest St. Image courtesy of Lendlease and Ivanho\u00e9 Cambridge<\/em><\/p><\/div>\n

In September 2022, Lendlease<\/strong> and Ivanho\u00e9 Cambridge <\/strong>commenced construction on their $500 million FORUM life science project<\/a>, marking the partners\u2019 first collaboration within the sector. The 350,000-square-foot building will aim for a LEED Platinum certification.<\/p>\n

In January, Boston\u2019s listing rate registered the largest year-over-year decrease among gateway cities, 4.9 percent, reaching $36.50 per square foot. Among these markets, the metro had the second smallest average listing rate that month, after Chicago ($27.80 per square foot). Manhattan is still the priciest market to rent office space in, bearing a $75.70 listing rate, followed by San Francisco ($67.40 per square foot) and the Bay Area ($57.10 per square foot).<\/p>\n

Transaction activity was high in 2022<\/h2>\n

In 2022, Boston\u2019s office sales volume amounted to $4.71 billion\u2014the second largest in the country, after Manhattan ($6.01 billion). Prices per square foot were highest in San Francisco ($930), Manhattan ($733), Seattle ($542) and Brooklyn ($532), with Boston coming in fifth with an average sale price of $491.<\/p>\n

\"Image<\/a>

One Patriots Park. Image courtesy of Newmark<\/em><\/p><\/div>\n

Last November, MetLife Investment Management <\/strong>completed its $103 million purchase<\/a> of the 109,085-square-foot Burlington BioCenter in Burlington, Mass. Originally designed as an office property, in 2019 the building was converted to life science use. Prior to this deal, another suburban Boston-area lab facility changed ownership. Barings <\/strong>picked up the 144,000-square-foot One Patriots Park in Bedford, Mass.,<\/a> for $132 million.<\/p>\n

In January, coworking space represented 1.7 percent of total office product in the market. Boston\u2019s rate was close to the national average, making up 1.8 percent of total stock. Manhattan (2.7 percent), Los Angeles (2.3 percent) and Chicago (2.0 percent) were the metros that led the nation in terms of flex space relative to total office stock. In November 2022, Industrious expanded its Boston coworking footprint<\/a>, marking the flex office provider\u2019s seventh location in the metro.<\/p>\n","protected":false},"excerpt":{"rendered":"

With life sciences bolstering development, the city has surpassed Manhattan for under-construction stock.<\/p>\n","protected":false},"author":739,"featured_media":1004649698,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1490,21782,21808,22251,11,21742,21747],"tags":[51047,50674],"class_list":["post-1004649173","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-boston","category-development","category-featured","category-in-focus","category-midatlantic","category-latest","category-office","tag-marketupdate","tag-commercialedge"],"acf":[],"yoast_head":"\nBoston Leads US Office Pipeline - Commercial Property Executive<\/title>\n<meta name=\"description\" content=\"Boston's under-construction office pipeline has surpassed Manhattan's volume, with life sciences bolstering the metro's strong performance.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/market-report-boston-leads-us-office-pipeline\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Market Report: Boston Leads US Office Pipeline\" \/>\n<meta property=\"og:description\" content=\"Boston's under-construction office pipeline has surpassed Manhattan's volume, with life sciences bolstering the metro's strong performance.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/market-report-boston-leads-us-office-pipeline\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2023-03-24T15:04:47+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-04-06T06:33:06+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2023\/03\/Market-Update-Boston-featured.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"900\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Beata Lorincz\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/market-report-boston-leads-us-office-pipeline\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/market-report-boston-leads-us-office-pipeline\/\",\"name\":\"Boston Leads US Office Pipeline - 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