Manikka Bowman

“I think Boston is the hottest market in the country right now – and maybe the globe,” Ann Cole, a managing director with JP Morgan, proclaimed at the recent Urban Land Institute’s Boston Spring Summit. 

It is a powerful statement and it speaks to the enduring success of this region’s growth in the tech and life sciences sector. Even with the construction of millions of square feet of new office and lab properties in recent years – and more in the pipeline – positive absorption remains steady year over year. The overall vacancy rate for Boston office space is less than 10 percent. 

Commercial rents are up across the Hub’s various submarkets as well, as foreign and domestic investors continue to pour money into the region.  

Tenants Seek Amenities 

Traditional tenants, such as financial services companies, universities and healthcare companies, remain strong drivers for the investor community. But, nontraditional tenants are helping change the paradigm.  

Wayfair and WeWork, two e-commerce companies that weren’t even on the scene 10 years ago, now control more office space than any Boston company except Fidelity – 1.4 million and 1.2 million square feet, respectively, compared to Fidelity’s 1.5 million. And with WeWork actively seeking additional space in the market, it may soon become Boston’s largest tenant.  

These major newcomers are also responsible for also a fundamental shift in how tenants think about office space and how landlords structure leases and make them more appealing.  

“Amenities are one of the main things that tenants are looking for,” said Kristen Blount, a Colliers executive vice president who also spoke at the summit. “They’re also looking for culture, brand, wellness and a technology-enabled environment in order to compete for the talent.” 

Firms capitalizing on Greater Boston’s appeal are developing in previously overlooked areas because of their access to public transit. Assembly Row, the West End/North and Boston Landing are just transforming neighborhoods. Developer HYM is hoping for the same success at Suffolk Downs, where the redevelopment of the 161-acre tract in East Boston is proceeding with plans for new residential, retail, office, hotel and lab space, plus $365 million in infrastructure.  

Congestion, Inequality Must Be Addressed 

“With 6 million square feet of tenant requirements in the market and rent rising at nearly 10 percent per year, tenants need outlets, and want outlets that are centered around public transportation. Traffic has never been worse [in Greater Boston] than it is right now,” Blount said. 

In fact, the Hub earned the distinction of “most congested city in the United States during peak commuting times,” according to a global scorecard from the analytics firm INRIX. There are myriad reasons, among them the city’s population growth. Between 2000 and 2017, Boston’s population grew by nearly 96,000 people.  

But traffic isn’t the only dark lining among the silver clouds floating above the Pru. Inequality is a growing issue here. According to the latest Brookings Institution report on income inequality, Boston is one of the most unequal cities in the nation.  

That point underscored the keynote address from Rep. Ayanna Pressley. Redevelopment, she said, is further driving up the cost of housing in an already over-heated market and forcing many middle and lower income and residents out of the city and the inner suburbs. She described what happens when you board the MBTA’s No. 1 bus from Cambridge and ride 3 miles south to Dudley Station – both of which lie in her congressional district. 

“By the time you’ve made the 30-minute trip, the median household income in the neighborhoods around you have dropped by nearly $50,000 a year,” she said. 

Hot markets eventually cool and developers know the Hub’s growth cycle will change in the years ahead. At the same time, metro Boston’s public and private sector leaders must work to address problems of inequality and congestion so all residents who call this region home can feel great about living, working and playing here.  

 Manikka Bowman is director of policy and outreach for ULI Boston/New England.