What a start to the year. Headline after headline continues to show the strength of the Boston market, beginning with State Street announcing its plans to relocate its headquarters to Bulfinch Crossing in a 510,000 SF deal. Almost immediately after, WeWork announced it would take 250,000 SF at the top of 1 Lincoln, backfilling a large chunk of State Street’s current headquarters. Other major deals included Wayfair taking more space (300,000 SF) in the Back Bay from Liberty Mutual, UMass choosing Accordia Partners as the selected developer for the Bayside Expo site, GE putting its new headquarters and development site up for sale, and Related Beal reportedly winning the development rights to 6.5 acres of land held by Procter & Gamble subsidiary Gillette.
Vacancies continued to fall in Cambridge at the start of the year, as momentum remains strong. Multiple firms seeking large-scale requirements are getting close to signing, which will increase velocity and validate decisions by developers willing to build on spec. Overall, vacancies were 3.5%, down 0.3 percentage points from last quarter and 0.2 percentage points from year-ago levels.
Momentum continues in Boston’s suburbs. Vacancies are back to levels last seen in early 2008, but aggregate rents are nearly $4/SF higher than in those days. The core Route 128 submarkets (Route 128 Northwest and 128 Mass Pike) are leading the way: Route 128 Northwest has the lowest vacancies in nearly two decades, at 12.5% for the first time since early 2001 at the start of the tech bust.