Q2-2018-OfficeReport
OFFICE STATISTICS CAMBRIDGE
CAMBRIDGE
TOTAL INVENTORY (SF)
TOTAL VACANT (SF)
TOTAL VACANCY RATE
Q2 NET ABSORPTION (SF)
YTD NET ABSORPTION (SF)
ASKING RENT ($/SF)
Class A
7,036,443
290,336
4.1%
30,212
17,124
$63.77
Class B
3,049,530
34,793
1.1%
(148,058)
(123,540)
$55.28
CLASS A & B TOTAL
10,085,973
325,129
3.2%
(117,846)
(106,416)
$62.90
Vacanct SF
Q1 2 Q2 2 Q3 2 Q4 2 Q1 2 Q2 2 Q3 2 Q4 2 Q1 2 Q2 2 Q3 2 Q4 2 Q1 2 Q2 2 Q3 2 Q4 2 Q1 2 Q2 2 Q3 2 Q4 2 Q1 2 Q2 2
TRENDS • Cambridge remains one of Boston’s tightest and most expensive office markets. Vacancies ended the second quarter near historic lows despite posting more than 100,000 square feet of negative absorption. Abt Associates’ relocation to 10 Fawcett Street and the planned redevelopment of the firm’s former headquarters at 55 Wheeler Street into a residential development accounted for a majority of this activity. Persistent demand for commercial space in Cambridge will keep fundamentals at or near current lows in the foreseeable future; leaving landlords with a clear upper hand. • Tech firms continue to drive demand for office space in Cambridge. In one of the largest transactions of the quarter, HubSpot extended its current lease at 1 Canal Park in East Cambridge and expanded its footprint by another 10,100 square feet. Data management startup, Devo, is relocating from Burlington to 4,500 square feet at 150 Cambridge Park Drive in West Cambridge. Wistia, OnShape and Happie also leased space in Cambridge during the second quarter. • Office construction is on Cambridge’s horizon and pricing for this space has reached new heights. Lease rates for some existing Class A space in East Cambridge are already in the low-to-mid $90s/SF, with the Cambridge average reaching almost $64/SF in the second quarter. Office users looking at new construction in this Kendall Square will likely pay over $100/SF Gross, which would represent a new high for the Cambridge market. • Despite such lofty pricing, demand remains robust for office space in Cambridge and new development is likely warranted. Boston Properties received approval for an additional 250,000-371,000-square-foot office tower on Main Street in Kendall Square. A few tenants (some are speculating Google is a prospective candidate) are reportedly in negotiations for the space. Out-of-market users are also circling MIT’s development on Main Street, also in Kendall Square. With the majority of DivcoWest’s first commercial building at Cambridge Crossing preleased to Philips North America, after committing to an additional 100,000 square feet in the building, the developer plans to bring another 500,000 square feet of speculative office and lab space to the site. • The long-awaited MBTA Green Line extension broke ground in June and areas along the new light rail route, including Cambridge Crossing and along First Street, are already reaping the rewards. New office, lab, multifamily and retail developments are popping up in parts of East Cambridge previously considered the end of the transit line. The expansion project will ultimately connect Cambridge to growth corridors in Somerville and other Inner Suburbs as well as Downtown Boston and Back Bay. These connections will provide tenants with another viable relief valve for the uber-tight Kendall Square market.
VACANCT SF
1,200
1,000
800
600
SF (000s)
400
200
0
2013
2014
2015
2016
2017
2018
Direct
Sublease
NET ABSORPTION AND ASKING RENT
300
$80
$70
200
$60
100
$50
0
$40
SF (000s)
$30
-100
Asking Rent ($/SF)
Net Absorption and Asking Rent
$20
-200
$10
$83.98 $55.28 $62.90
-300
$0
2015
2016
2017
2018
Net Absorption
Asking Rent
NOTABLE TRANSACTIONS Notable Transactions
HubSpot
Shiseido Cosmetics
Akebia Therapeutics
Onshape
Wistia
0K SF
20K SF
40K SF
60K SF
80K SF
East Cambridge
West Cambridge
3
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