RWH - Q4 2020 Greater Boston CRE Market Report

2020 321 Commonwealth Rd, Wayland, MA 01778
Phone: 508-655-5626
Web : www.rwholmes.com

Q4 REPORT

Greater Boston Market Report

by R.W. Holmes Realty

Q4 2020

2021 OUTLOOK
A LOOK BACK AT 2020

Q4 2020

2021 OUTLOOK

What a year it has been.

How much office space will need to be repurposed? A booming
industrial market continues with exponential growth, and the biotech
sector accelerates an impressive march into the suburbs.

Typically, I would offer my thoughts on the various real estate sectors
for the coming year. However, in a year full of stress and anxiety, I
prefer to focus on the lessons we have learned which have very little
to do with real estate.

As a result of this pandemic, we have become quite efficient with
Zoom, Microsoft Teams, and other means of communication.
Yes, we can save money in the future on business travel and find
other ways to improve profit margins. However, what I hope are
the most important takeaways come from the interactions with our
own employees. We had the opportunity to peek into the homes
and lives of our employees and have a whole new appreciation for
their sacrifices and in some cases herculean efforts. Juggling a couple
young children or caring for elder parents, balancing philanthropic
endeavours and other personal initiatives - we are experiencing first-
hand the challenges and sacrifices made by many of our employees
and vendors. In the end, I hope we become more sympathetic and
compassionate and gain a new appreciation for our employees.

I hope we also take a few steps back to become more cognizant of
the underlying needs in our community - food insecurity, loss of
shelter, and a myriad of other challenges facing many people.

As difficult as 2020 has been, I am quite optimistic we come out of
this pandemic learning many valuable lessons. We wish everyone a
healthy, prosperous, and compassionate New Year.

Garry R. Holmes
President

Q4 2020

SUBMARKET DATA
GREATER BOSTON SUBMARKETS

Q4 2020

128 CENTRAL (office)

SUBMARKET NEWS

MARKET RECAP
• Vacancy remained relatively stable in Central 128 solely because of the life science sector.
• Professional service firms and engineering/robotics companies are staying relatively active in the market

Brick Jones (law firm) doubled in size and took 10,000 SF at 250 First Ave in Needham.
• Most institutional owners remain set on their pre-COVID rent and incentive packages, while several local

and regional owners are providing rent discounts (on average $1-3/SF) and more significant free rent.
NOTEWORTHY NEWS
• There is talk that Zoom Info will be taking VistaPrint’s entire space on Wyman St in Waltham (approx.

200,000 SF) and VistaPrint will take Zoom Info’s current space on Trapelo Rd (approx. 60,000 SF).
• Lab redevelopments will continue for underutilized office space in Central 128. Landlords willing to build

move-in ready lab buildings with lab infrastructure in place are seeing success – such as 1560 Trapelo Rd
and 20 Maguire who each signed deals in Q4 after sitting vacant for over a year. 130 Turner in Waltham is
one of the more recent buildings looking to convert over 100,000 SF to lab.
• Buildings sold to owner occupants or those with strong tenants and term are selling for pre-COVID prices.
Some owners are speaking with tenants whose leases expire in 2022+ to improve WALT for building values.
AREAS OF CONCERN
• Over 4,000,000 SF of lab development to be completed by 2024 is underway in Central 128. 70% is being
built on spec. While the additional supply pipeline is a relief, there is over 1,000,000 SF of requirements in
the market now with few to no options in Central 128.
• While the number of sublets decreased slightly for Q4 compared to Q3 (6 new sublets over 10,000 SF
versus 8 in Q3), many of our owners are understandably still concerned that more sublease space will come
available later in 2021.

RECAP OF MARKET HEALTH

28,500,000 14% $38.50/SF 365,000
SQUARE FEET UNDER
TOTAL SQUARE FEET VACANCY RATE AVERAGE RATE (GROSS)
CONSTRUCTION
CLASS A & B

NOTEWORTHY TRANSACTIONS

Lease Lease Sale
20 CityPoint 1560 Trapelo Rd 152 Grove St, 43 Foundry Ave,

Waltham Waltham 41 Seyon St, Waltham
75,000 SF 60,000 SF 615,000 SF
Imprivata Dyne Therapeutics
$344,000,000 ($559/SF)

Q4 2020

128 NORTH/3 NORTH (office)

SUBMARKET NEWS

MARKET RECAP
• Despite the uncertainty of the return to the workplace for office users, many in senior

management continue to hold the opinion that they will return to the office. A sign that for
many companies, a physical return is not a question of “if” but more of “when”.
NOTEWORTHY NEWS
• The minimal absorption we see in the market appears to be very industry centric: engineering
firms, life sciences/biotech related users, and medical and medical related users are continuing
to expand and search for space.
• The technology industry seems hardest hit as far as physical occupancy, but despite the empty
parking lots in most office parks, most large users have not opted to sublease yet in the market
– a sign of intended return once the COVID situation improves.
• 1 Patriots Park in Bedford which is a 143,616 SF, 2-story office/lab building trades at an
impressive $72,500,000 ($505/SF) to Jumbo Capital and Iron Point Investors.
AREAS OF CONCERN
• For landlords that are holding on to vacancy from pre-COVID, it’s doubtful that much leasing
activity will occur within the near future. However, there is reason for optimism based on
employer and sentiment on a future return to the office, particularly in the technology sector.

RECAP OF MARKET HEALTH

47,620,000 16% $25.00/SF 266,000
TOTAL SQUARE FEET VACANCY RATE
AVERAGE RATE (GROSS) SQUARE FEET UNDER

CLASS A & B CONSTRUCTION

NOTEWORTHY TRANSACTIONS

Lease Sale Sale
300 Brickstone Square 296-300 Concord Rd 20-36 Crosby Dr

Andover Billerica Bedford
28,148 SF 360,962 SF 590,000 SF
Healthcore $12,500,000 ($34.64/SF) $122,000,000 ($206/SF)

Q4 2020

NATICK/FRAMINGHAM (office)

SUBMARKET NEWS

MARKET RECAP
• Surprisingly, the vacancy decreased 1.1% for the year to 11.5%. Subleases are hitting the market but at

121,498 SF that only represents 1.4% of the total vacancy.
• One trend we are noticing is the apparent flight to Class A - product. Those buildings that are positioned just

below the top tier, (i.e. $24-26/SF vs. $30+) appear to be the sweet spot for many office users looking to
maximize value while maintaining a strong corporate image.
NOTEWORTHY NEWS
• Further demonstrating the resiliency of the lab market despite the COVID slowdown, Canadian based
Oxford Property Group purchased a portfolio of three Framingham life science buildings from Carlyle and
King Street Properties for a record $153 Million ($537/SF).
AREAS OF INTEREST
• One emerging trend that appears to be gaining ground is the conversion of larger retail stores into office,
industrial or life science space. One interesting example of this adaptive re-use is evidenced by Hudson
Bay’s current plans to turn the former Lord & Taylor Department store at the Natick Mall into 115,000 SF
of high amenity office, co-working, and possibly Life science space. Although no longer associated with
the now bankrupt Lord and Taylor brand, Hudson Bay currently owns the ground leases on all 38 locations
nationwide. Like similar markets, (including The Burlington Mall and the South Shore Plaza), Hudson
Bay is currently testing the waters with their “York Factory” concept intended to be an innovative office
environment which would be able to tap into all the amenities associated with the mall. We are told Hudson
Bay will begin to gut the former department store in Q1 2021 but wait until an anchor tenant is procured
before proceeding to fully build-out the space - in turn dictating the project’s overall direction.

RECAP OF MARKET HEALTH

8,460,000 11.5% $24.00/SF 0
TOTAL SQUARE FEET VACANCY RATE AVERAGE RATE (GROSS) SQUARE FEET UNDER

CLASS A & B SPACE CONSTRUCTION

NOTEWORTHY TRANSACTIONS

Sale Sale Proposed
235 West Central St 33 New York Ave & 1-5 Mountain Rd 1245 Worcester Rd

Natick Framingham Natick
26,000 SF 267,000 SF 115,000 SF
$2,750,000 ($106/SF) $151,000,000 ($537/SF) York Factory

Q4 2020

495 WEST (office)

SUBMARKET NEWS

MARKET RECAP
• RX Advance expanded into an 80,000 SF facility in Southborough, and German company Sartorius Group has

taken 40,000 SF on Locke Drive in Marlborough and also bought Marlborough based Water-Sep Technology.
• Novaya recently closed on 123 Felton Street for $16,700,000. The Campus at Marlborough which traded earlier

this year for $62,700,000 has since seen renewed activity: California biotech firm Revance Therapeutics, has
signed on for a build to suit lab building, and they have seen serious interest from other large users.
• Transactions were difficult to come by in Q4. Most of the tenants touring were on the smaller side and were
looking for short term deals. The good news for 495 West is that most of the office buildings can be demised to
accommodate users in the 1,000 SF - 5,000 SF range.
NOTEWORTHY NEWS
• Once completed in early 2021, Olympus will be begin moving into a new 150,000 SF building in Westborough.
• Vibalogics leased 118,000 SF at the former Cisco Campus, 1414 Massachusetts Ave in Boxborough.
• Marvell Technology is out looking for 50,000 - 60,000 SF.
AREAS OF CONCERN
• When tenants come back to the market, we anticipate them looking for shorter lease terms. With
construction costs continually rising, there is going to have to be a reckoning. With less term, TI dollars are
going to be at a premium, so tenants are going to have to adapt more to existing conditions than they have in
the past.
• The average asking market rental rate has remained at the same level as it was at the start of 2020. While this
is good news, vacancy has increased by 2% over the same time. With limited activity and mostly from small
users, we remain optimistic in that overall activity will increase by the end of Q3 2021.

RECAP OF MARKET HEALTH

11,900,000 19.5% $19.50/SF 150,000
TOTAL SQUARE FEET VACANCY RATE AVERAGE RATE (GROSS) SQUARE FEET UNDER

CLASS A & B SPACE CONSTRUCTION

NOTEWORTHY TRANSACTIONS

Sale Lease - Build to Suit Lease
123 Felton St The Campus at Marlborough 150 Locke Dr
Marlborough Marlborough
Marlborough
72,000 SF 79,000 SF 40,000 SF
16,700,000 ($231/SF) Sartorius Group
Revance Therapeutics

Q4 2020

128 NORTH/3 NORTH (industrial)

SSUUBBMMAARRKKEETT NNEEWWSS

MARKET RECAP
• Lab conversion continues to bleed into the flex market more and more as seen with Charles River

Labs taking 15,000 SF at 299 Ballardvale in Wilmington and Azzur Group’s 50,000 SF lease at 60
Blanchard Rd in Burlington.
NOTEWORTHY NEWS
• Industrial sales continue at a rapid clip at record numbers. The Woburn/Wilmington area is
leading the way in this trend, with 15 buildings trading in Q4 at an average of $153/SF.
• Sales values are up across all types: from speculative investors purchasing under performing
assets, to stabilized assets, and owner user purchases.
• Hillwood’s purchase of 1450 Osgood will lead to a total of about 3,600,000 SF of new warehouse
space for Amazon once the project is complete.
• Home Depot’s 700,000 SF lease at 495 Woburn St in Tewksbury will be a state-of-the-art
fulfillment center.
AREAS OF CONCERN
• Prior to COVID, the largest challenge for users was demand from other users in the market. With
the change in asset demand from institutions shifting to industrial assets as well as lab users
converting vacant space and paying a premium, traditional flex/industrial users will face further
limited supply and premium rents in order to relocate.

RECAP OF MARKET HEALTH

94,450,000 5.5% $12.65/SF NNN 1,100,000
TOTAL SQUARE FEET VACANCY RATE AVERAGE RATE SQUARE FEET UNDER

CONSTRUCTION

NOTEWORTHY TRANSACTIONS

Lease Sale Sale
495 Woburn St 1450 Osgood St 220-240 Ballardvale Ave
North Andover
Tewksbury Wilmington
700,000 SF 1,100,000 SF 255,000 SF
Home Depot $31,500,000 ($6.57/SF) $55,000,000 ($215/SF)

Q4 2020

495 SOUTH (industrial)

SSUUBBMMAARRKKEETT NNEEWWSS

MARKET RECAP
• As the industrial market continues to surge in the fourth quarter of 2020, record high sales values

have been achieved in previously leased Amazon facilities along with a constant stream of leasing.
• Looking back, 2020 may be remembered as the end of multiple existing product availabilities

with a limited supply of good quality vacant flex or warehousing product and almost invisible new
speculative construction.
NOTEWORTHY NEWS
• Currently, 60 industrial projects of 100,000 SF to 3,000,000 SF, totalling over 22,000,000 SF, are
proposed along the outskirts of the Route 495 corridor with only three under construction and all
but one is preleased.
AREAS OF CONCERN
• Given that most of the proposed projects will only be developed for a build to suit, the lack of
available supply will be the predominant concern for 2021. If you are a tenant looking for 15-
20,000 SF Flex or 40-50,000 SF warehouse, there are only four options in each category with at
least an equal number of existing requirements currently searching in the 495 South market.
• Rents now average $10.10/SF which is a 15% increase over the past year. The vacancy rate
dropped from 6.2% to 4% over the past two years.

RECAP OF MARKET HEALTH

47,300,000 4% $10.10/SF NNN 1,100,000
TOTAL SQUARE FEET VACANCY RATE AVERAGE RATE SQUARE FEET UNDER

CONSTRUCTION

NOTEWORTHY TRANSACTIONS

Sale Sale Sale
1 National St 351 & 353 Maple St 82 South St
Hopkinton
Milford Bellingham 281,800 SF
296,700 SF 427,500 SF $33,000,000 ($117/SF)
$52,700,000 ($178/SF) $76,100,000 ($178/SF)

Q4 2020

RT 24 (industrial)

SSUUBBMMAARRKKEETT NNEEWWSS

MARKET RECAP
• The Route 24 industrial market remains tight for spaces under 25,000 SF and was somewhat

lethargic for spaces over 100,000 SF. An example of this is the Easton Industrial Park which had
three - 10,000 SF flex units come available in the last 30 - 60 days. One space is now leased, one is
in final lease negotiations, and the 3rd space has two companies competing for it.
• Compare this with 35 United Dr in the West Bridgewater Industrial Park, about 5 miles from the
Easton Industrial Park, which has 500,000 SF (subdividable) that remains vacant after 1.5 years
and a new 350,000 SF spec building at 1025 Elm Street in Bridgewater, that has not secured any
commitments after 9 months.
• Despite the lack of recent activity for the 5 options that offer 100,000+ SF of space, expect some
announcements shortly.
• Lease rates for spaces 30,000 SF and under remain at an all-time high with little product to choose
from.
NOTEWORTHY NEWS
• 275 Bodwell Street in Avon just became available for lease and totals 210,000 SF.
AREAS OF CONCERN
• Smaller tenants with leases expiring in the next 18 months will be faced with rent increases of

20% or higher compared to their current rental rates.

RECAP OF MARKET HEALTH

40,770,000 5.5% $9.25/SF NNN 42,500
TOTAL SQUARE FEET VACANCY RATE AVERAGE RATE SQUARE FEET UNDER

CONSTRUCTION

NOTEWORTHY TRANSACTIONS

Sale Sale Sale
530 John Hancock Rd 825 University Ave 175 Campanelli Dr

Taunton Norwood Braintree
181,980 SF 166,574 SF 1,669,488 SF
$28,600,000 ($157.16/SF) $46,300,000 ($277.95/SF) $151,000,000 ($90.45/SF)

THE DEVELOPMENT BOOM IN
ALLSTON

2020 brought a surge of redevelopment interest to Allston – thanks primarily to the success of the Boston Landing
development and commuter station that came with it. There are currently 19 Allston redevelopment projects
either approved or under review by the Boston Planning & Redevelopment Authority. Each of these projects
aim to bring either more life science or multi-family to the area. Here are a few worth noting that have made
significant progress in 2020:
Braintree Street Development
Filed in August 2020, the Braintree Street development looks to add more mixed-use development to the Boston
Landing area. This property abuts the Allston Yards project and is planning to build a 400,000 SF office/lab building
as well as 97 residential units. The redevelopment is a partnership between Bracken Development and Braintree
Street Realty.
Innovation Village
Directly across the Pike from Boston Landing, Berkeley Investments in seeking approval for the redevelopment
of Boston Tech Center. Plans were filed in October 2020 and look to bring 548,000 SF of lab-ready office space,
20,000 SF of retail, 314 residential units, and 2 acres of green space to the parcel. The property, owned by
Harvard University, is being called “Innovation Village” due to its focus on S.T.E.A.M industries. The project will
take just over 3 years to complete once approved.
Sale of 20 Guest Street
In October 2020, New Balance sold their former HQ for $72,000,000 (approx. $314/SF). Griffith Properties
in partnership with DC-based Artemis Real Estate Partners purchased the 228,000 SF building. Though not a
redevelopment, this sale shows the impact that the Boston Landing project has had on the value and interest in
Allston.
Allston Yards
In December 2020, the 1,200,000 SF redevelopment called Allston Yards received approval. New England
Development is partnering with landowners, Stop & Shop, to develop the 10.6 acres into a lively mixed-use
development. They plan to build 868 residential units, 350,000 SF of office space, and 117,000 SF of retail. The
project will also include community green space, funding towards the Allston Brighton Homeowner Fund, and
$2,500,000 for bus and commuter rail improvements.
WBZ Studio – 1170 Soldiers Field Rd
Unlike the previously mentioned
developments which all surround Boston
Landing, the redevelopment of 1170 Soldiers
Field Rd is located in another area of Allston
undergoing major changes. In addition
to The Davis Cos. planned multi-family
redevelopment of the Skating Club of Boston,
in December 2020, the partnership between
Mount Vernon Co. and National Development
received approvals for their 65,000 SF new
studio building for CBS-owned WBZ Studios. In
the first week of January 2021, the partnership
has also proposed plans for a 650,000 SF life
science development adjacent to the studio.

New Balance Headquarters

LOOKING BACK AT 2020

90 16 75

LEASES SALES EXCLUSIVE
PROPERTY LISTINGS

Growth of the R.W. Holmes Team

• David Gilkie – Senior VP: Dave joined the R.W. Holmes team in 2020 to continue to strengthen our
North Suburban Market team and executive leadership. Dave is a board member of SIOR and a past
president of CCIM. Dave brings over 30 years of real estate expertise.

• Samantha Ludwig – Marketing Manager: In February 2020, we welcomed Samantha as our
Marketing Manager. Samantha continues to modernize the R.W. Holmes brand and find creative and
unique marketing outlets for clients.

2021: R.W. Holmes Hits 45 Years in Business

• We are excited to announce 2021 brings R.W. Holmes to 45 years in business. Founded in 1976, we
are proud to hit such an incredible milestone. We remain family owned, now in our third generation,
and proud to continue our legacy of being the Greater Boston real estate experts, while reinvigorating
the company in our ceaseless effort to provide clients with the best service. We thank all of our
clients for helping us build this legacy.

Thank you to all of our clients for your continued
tr u st i n R .W. H olmes over the past 44 years .We
wish you and your families continued health and
happiness in 2021.

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

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