Newbury Street is likely to lead the resurgence of retail in Boston with multiple store opening announcements in the spring. Photo by Lucia Caradonio | Courtesy photo
As the world begins to emerge from mandatory lockdowns and restrictions begin to ease, all signs point to a bright future for retail in Boston’s core submarkets.
After a year of little to no leasing activity, Boston is seeing an unprecedented amount of attention from retailers and restaurateurs. Luxury watches and jewelry, contemporary fashion, outdoor-focused retailers, full-service and fast-casual eateries, home furnishings and decor, financial institutions, health and beauty services and both boutique and full-service fitness concepts are actively seeking new locations in Boston. There seems to be a firm belief in the fundamentals of Boston’s economy rooted in life sciences, finance, technology and higher education.
This, coupled with Boston’s historically constrained real estate offerings, has made 2021 one of the more competitive retail leasing markets in recent history. At a moment when this amount of interest and activity defies logic, we can only point toward a very bullish optimism surrounding COVID retail and restaurant spending.
The Back Bay has seen the largest amount of retail leasing of any submarket in Boston, with Newbury Street as the center of activity. With the number of “Retail Space for Lease” signs visible to the pedestrian, one would think that Newbury Street is in dire straits. Actually, this couldn’t be further from the truth. The activity going on behind the scenes with upcoming store opening announcements in the coming months will offer a very different story.
Matt Curtin
The competitive nature in which restaurateurs, mainly from outside of Boston, are pursuing both first- and second-generation opportunities has also been an uplifting surprise. The creative deal structure that many Boston landlords have been offering, along with the higher availability and lower cost of liquor licenses, has helped drive interest as well as speed to execution. Many landlords have gotten comfortable with structuring leases that begin with one or more years of no base rent, but only operating expenses and a percentage of gross sales. Higher tenant improvement allowances have also been offered in some, but not all, cases.
As active as the market has been over the last six months, we see activity picking up significantly over the next two months as real estate managers get vaccinated and are able to travel again. While technology such as Matterport cameras that can create online 3D tours – which we have implemented into almost all of our marketing materials – has helped, most retailers and restaurants wait to commit until they are able to see the real estate in person. The timing for COVID-19 vaccinations, aligning with early summer in New England, should help as well.
Greg Covey
Overall, we are very optimistic about the performance of retailers and restaurants in Boston, and the leasing activity that this confidence brings. The pent-up demand by consumers is evident, and smart retailers and restaurateurs would like to be open and operating when the flood gates open.
Matt Curtin and Greg Covey are senior vice presidents at CBRE in Boston.
