RWH - Q1 2020 Greater Boston CRE Market Report

321 Commonwealth Rd, Wayland, MA 01778
Phone: 508-655-5626
Web : www.rwholmes.com

Q1 REPORT

Greater Boston Market Report

by R.W. Holmes Realty

Q1 2020

128 CENTRAL (office)

SUBMARKET NEWS

MARKET RECAP

• After an extended wait, Northland received enough votes in a referendum vote to move forward with their 24-
acre development on Needham Street and Oak Street in Newton. The site will bring 1.1 Million SF of mixed
development.

• Life Sciences remains the driver in large leases and property acquisitions. The largest deals in the market for Q1
2020 were at 75 Hayden Ave in Lexington – Dicerna, Frequency, and Voyager – taking a total of 180k SF. 2/3 sales
in Q1 2020 were massive trades on 128 properties. Wyman Properties acquired Ledgemont Technology Park for
$112M ($598/SF) and Alexandria acquired 275 Grove for $235M ($461/SF). Owners continue to look for conversion
projects with two properties in Lexington currently in front of the town for approvals on a lab conversion, which will
allow them to double their rent pricing.

• Sectors outside of life sciences remain strong along Central 128. Markforged, a 3D printer company in Watertown,
is working to expand again and take over 55k SF. Financial and tech sectors stay strong and continue to look for
expansion space.

WHAT WE WILL BE WATCHING

• Expect several headline sales to occur in Q2 2020. Investors stay confident with the Central 128 market and are
continuing to move forward with acquisitions. The Post in Waltham is set to close early April at $745/SF. The
3 building, 220,000 SF Liberty Mutual site in Weston is under agreement to a developer with plans for major
renovation. Will the quick reversal in economic conditions be the catalyst for tenants to consider Class B office
space and less expensive options along Rt 128 South or further West?

RECAP OF MARKET HEALTH

28,000,000 11.9% $39.75/SF 953,000
TOTAL SQUARE FEET VACANCY RATE AVERAGE RATE (GROSS) SQUARE FEET UNDER

CLASS A & B SPACE CONSTRUCTION

NOTEWORTHY TRANSACTIONS

Lease Sublet Sale
75 Hayden Ave., Lexington 1050 Winter St., Waltham 275 Grove St, Newton
$235,000,000 ($461/SF)
59,000 SF 27,500 SF Alexandria Properties
Frequency Therapeutics Citizen’s Disability

Q1 2020

128 NORTH/ RT. 3 NORTH (office)

SUBMARKET NEWS

MARKET RECAP

• Buildings that have the ability to offer a mix of space with a modern, first class presence for R&D/lab users
will now achieve rent that match or surplus traditional Class B office deals and rival Class A rents in select
sub-markets.

• With Triton Systems taking 45,000 SF of mostly research and development space at the former Comcast
space at 330 Billerica Road in Chelmsford and Boston Materials taking 36,000 SF at 900 Middlesex
Turnpike in Billerica, adaptive re-use into R&D/ Flex space continues to be a trend.

WHAT WE WILL BE WATCHING

• Suburban tech companies have been the largest office users in the market for decades. With many
employees working from home, will companies adopt a broader work from home policy? What will be
the lasting effect?

RECAP OF MARKET HEALTH

47,400,000 13.9% $26.25/SF 210,000
TOTAL SQUARE FEET VACANCY RATE AVERAGE RATE (GROSS) SQUARE FEET UNDER

CLASS A & B SPACE CONSTRUCTION

NOTEWORTHY TRANSACTIONS

Lease Lease Sale
25 Upton Dr., Wilmington 330 Billerica Rd., Chelmsford 55 Technology Dr., Lowell

40,000 SF 45,000 SF $12,400,000 ($138/SF)
Eckert and Ziegler Triton Systems Legacy Real Estate Ventures

Q1 2020

NATICK/FRAMINGHAM (office)

SUBMARKET NEWS

MARKET RECAP
• Lease activity remains consistent. Many Class B office buildings are finally seeing their first signs of rent appreciation

after investing in common area improvements and infrastructure. In Framingham 1, 3 and 30 Speen along with 205
Newbury Street (Carruth Capital, Calare, & Atlantic Management, respectively) are examples of properties that have
seen at least a 10-15% increase from their previous asking rates.
• The sale price of single story industrial/flex buildings in Natick have reached an all time high, with stand alone buildings
under 10,000 SF trading between $200-$300/SF. Many flex users from 128 who have become frustrated with their
market’s dwindling inventory are finding that these prices actually represent good value when compared to 128 rental
rates commonly between $20-30/SF NNN
• After undergoing a major lab conversion at 33 New York Ave in Framingham, King Street Properties has a lease pending
for the remaining 45,000 SF to a life science company located in Cambridge. The lab cluster continues to grow in this
sub-market.

WHAT WE WILL BE WATCHING

• With the construction stoppage there will be a backlog. Later in the year, though, will we finally see a decrease in
tenant improvement costs which will make it easier for landlords and tenants to consummate deals.

RECAP OF MARKET HEALTH

8,460,000 11.7% $26.35/SF 0
TOTAL SQUARE FEET VACANCY RATE
AVERAGE RATE (GROSS) SQUARE FEET UNDER

CLASS A & B SPACE CONSTRUCTION

NOTEWORTHY TRANSACTIONS

Renewal Lease Sale
5 Whittier St., Framingham 3 Huron Drive, Natick 500 Staples Drive, Framingham

55,800 SF 12,678 SF $165,000,000 ($248/SF)
Santander Allurion LCN Capital Partners

Q1 2020

495 WEST (office)

SUBMARKET NEWS

MARKET RECAP

• Small office tenants (5-10,000 SF) drive activity. However, this market is becoming a landing ground for some
large office users with Olympus (120,000 SF), RxAdvance (83,000 SF), Park Place Technologies (86,103 SF), Doble
Engineering (72,000 SF), and Candela (50,000 SF) as some recent examples.

• AAA rules the market: amenities, amenities, amenities. Without them building owners are struggling to fill
vacancies, even with incentives.

• With the steep increase in tenant improvement costs, Landlords are having a difficult time justifying lease terms
less than 5 years and in return are seeing longer 7-10 year leases being introduced.

WHAT WE WILL BE WATCHING

• Biomanufacturing is gaining traction - watch for companies announcing manufacturing/lab sites to be developed.
I-495 offers reasonably priced land with room to expand.

RECAP OF MARKET HEALTH

11,900,000 19% $21.00/SF 150,000
TOTAL SQUARE FEET VACANCY RATE AVERAGE RATE (GROSS) SQUARE FEET UNDER

CLASS A & B SPACE CONSTRUCTION

NOTEWORTHY TRANSACTIONS

Lease Lease Lease
136 Turnpike Rd., Southborough 1 Research Dr., Westborough 100 Campus Dr., Marlborough

83,000 SF 86,103 SF 25,000 SF
RxAdvance Park Place Technologies Akoya Biosciences

128 NQ12020 ORTH/RT. 3 NORTH (industrial)

SUBMARKET NEWS

MARKET RECAP
• The continued demand has caused rents to peak, with certain areas in proximity to Route 93 benefiting with a 15-20%

premium on asking rent.
• Demand from users has been a broad spectrum, ranging from e-commerce to traditional warehouse users and

R&D/light manufacturers. Specialized space users are facing the most difficulty, with a reluctance from landlords to
reposition space or provide a robust buildout due to market conditions.
• Other notable Q1 lease transactions include: Fotronic taking 21,000 SF at 5 Commonwealth in Woburn, De La Fontaine
taking 17,000 SF at 3-15 Normac in Woburn, and Bay State Pools taking 55,000 at Calare Properties’ new building at
301 Treble Cove Road in Billerica.

WHAT WE WILL BE WATCHING

• The demand for industrial space has not slowed down with several new leases signed for 20,000 SF+ in Q1. Amazon
has been out searching for more space in the Boston suburbs to supplement its large facility at the former NECCO
factory in Revere as seen in its recent signing for 100,000 SF at 100 Fordham Road in Wilmington. We expect several
other large Amazon deals in 2020.

RECAP OF MARKET HEALTH

94,900,000 5.4% $11.35/SF NNN 81,300
TOTAL SQUARE FEET VACANCY RATE AVERAGE RATE SQUARE FEET UNDER

CONSTRUCTION

NOTEWORTHY TRANSACTIONS

Lease Lease Sale
205 Lowell St., Wilmington 100,000 SF 80 Holton St., Woburn
100 Fordham Road, Wilmington $3,025,000 ($57/SF)
40,000 SF
Aerovironment Amazon GF Partners

Q1 2020

495 SOUTH (industrial)

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MARKET RECAP
• The first quarter of 2020 has begun much the same way 2019 ended with record high sales figures and a

significant volume of industrial leases. A broad range of contributors have participated in the Industrial
sectors strength ranging from real estate investors, consumer goods distributors to marijuana cultivation.

WHAT WE WILL BE WATCHING

• Most Industrial Landlords continue to be bullish about the Spring prospects, despite the current pause
in activity and are continuing new construction projects in anticipation of a fast resurgence for Summer
and Fall occupancy. The strength and diversity of the Massachusetts economy will continue to maintain a
reasonable balance between Industrial supply and demand for 2020.

RECAP OF MARKET HEALTH

46,800,000 5.7% $10.13/SF NNN 1,700,000
TOTAL SQUARE FEET VACANCY RATE AVERAGE RATE SQUARE FEET UNDER

CONSTRUCTION

NOTEWORTHY TRANSACTIONS

Sale Sale Lease
1 Kenwood Circle, Franklin 26 William Way, Bellingham 32 Forge Parkway, Franklin

$4.8M ($130/SF) $7,000,000 ($140/SF) 142,000 SF
Kenwood Properties LLC Frozen 4, LLC Mattress Firm Inc.

Q1 2020

RT 24 (industrial)

SUUBBMMAARRKKEETTNNEWEWS S

MARKET RECAP
• The upper Route 24/128 industrial market remained tight with low vacancy rates in the Easton Industrial

Park, Avon Industrial Park, and East Randolph Industrial Park. Space under 15,000 SF remains difficult to
find.
• Lower Route 24 and southern Route 495 offer a disproportionate amount of larger industrial spaces over
60,000 SF but very few alternatives for 20,000 SF and under.

WHAT WE WILL BE WATCHING

• Within a 3 mile radius in West Bridgewater and Bridgewater there is over 1,000,000 SF of larger spaces
available. Moving a bit further south to Taunton, Norton and Middleborough there is about 1,300,000
SF of larger spaces available. Most of these spaces are 100,000 SF and above. How will the impact of
COVID-19 affect these large vacancies?

RECAP OF MARKET HEALTH

39,800,000 5.1% $9.20/SF NNN 1,050,000
TOTAL SQUARE FEET VACANCY RATE AVERAGE RATE SQUARE FEET UNDER

CONSTRUCTION

NOTEWORTHY TRANSACTIONS

Sale Sale Sale
42 Longwater Dr., Norwell
9-11 Mear Road, Holbrook 1120 & 1150 W. Chestnut St., Brockton $27,500,000 ($265.70/SF)

$5,050,000 ($51.40/SF) $9,225,000 Clean Harbors

Northern Container Corporation NorthBridge Partners

Q1 2M020ARKET SPOTLIGHT

I-495 INDUSTRIAL DEVELOPMENTS

Market Spotlight: I-495 Industrial Developments

Investors remain so bullish on the industrial asset class that they are investing in the outer
markets in big ways – and for good reason.

Build to Suits:
In 2019, just over 1 million square feet of build to suit developments were delivered. 2020
we will see another 1.5 million square feet be delivered. These BTS tenants can be typically
categorized as established companies that already had a local presence and needed expansion
space. For example – Expeditors has their 112,500 SF build to suit being delivered in 2020.
The new location will be at 795 Jubilee Drive in Peabody, within the Centennial Business Park
where Expeditors has been located since 1997. Similarly, Primetals Technologies is building
a 183,000 SF building at 5 Gilmore Drive in Sutton, just 15 miles south from their current
Worcester location. The most common industries who underwent build to suits in 2019 are
e-commerce, manufacturing, domestic goods, life sciences, and cannabis.

Spec Construction:
Amazon continues to be a driving force of these spec developments, with 4 major leases
signed in 2019, 1 currently underway, and the expectation of several more by the end of
2020. Other domestic good companies are also attributing to the industrial demand; Lowe’s
is supposedly looking for 1 million SF of new warehouse space. Spec construction has been
a target not only of the typical industrial tenants, but for growing life science companies as
well. Brammer Bio is under agreement to purchase 5 Commerce Boulevard upon completion
of the shell building. The 288,000 SF warehouse in Plainville will then be renovated to turn the
property into a lab building.

A Few 2020 I-495 Developments to Highlight

150 Hayes Memorial Drive (Cross Roads Industrial Park), Northborough
The 167,000 SF warehouse/distribution facility was completed in February 2020 on spec.
The building was constructed by The Gutierrez Company as part of their larger Cross Roads
development totalling 2 million SF of industrial space. To date, 782,000 SF of space has been
leased in the development. At 150 Hayes Memorial, only 67,000 SF remains available with a
new 100,000 SF lease being signed with Max Finkelstein, Inc. – a regional tire distributor.

Blue Star Business Park, Norton
The 12 building, 887,000 SF mixed use business park by Condyne began construction in 2018.
Phase 1 consists of four buildings, three of which are spec warehouse/manufacturing buildings
ranging from 125,000-220,000 SF. These first buildings are expected to be delivered in late
2020. There is already a lease out for 110,000 SF in the 220,000 SF building 5.

45 Kenwood Circle, Franklin
Looking to satisfy the abundant mid-size warehouse demand, 45 Kenwood Circle is a 50,000 SF
proposed build to suit development in Franklin by veteran Franklin/Bellingham investor, TMC
Holdings. Activity on the building is strong, with particular interest from the cultivation and
cold storage industries.

612 Douglas St, Uxbridge – Uxbridge Business Park
The largest development to be delivered in 2020 is the new Medline facility in Uxbridge. The
800,000 SF building is part of Campanelli’s 1.6 million SF Uxbridge Business Park. Additional
activity in the park came from Cultivate, one of the first Massachusetts recreational marijuana
dispensaries, who purchased $2M of land from Campanelli to build a new facility, up to
130,000 SF, for cultivation, office, and R&D. Two lots remain available – one can accommodate
a 200,000 SF building and another lot for a 400,000 SF building.

Thank you to all of our clients for your continued
t r u st i n R .W. H olmes over the past 44 years . We
wish you and your families continued health and

happiness during these difficult times.

CORPORATE LEADERSHIP TEAM

Garry Holmes Dean Blackey John Eysenbach Craig Johnston Paul McKeon Arthur Amadei
President Managing Director Executive Vice Senior Vice President Director of Senior Vice President
President Finance

Robert Strelke Jim Bartholomew Mike Ogasapian Elizabeth Holmes Samantha Ludwig
Vice President Vice President Assistant Vice Director of Corporate Marketing
President
Services Manager