2012 Global Market report - NAI Global

Suburban Maryland
Boston, Massachusetts
Contact
NAI Michael
+1 301 459 4400
Metropolitan Area
Economic Overview
2011
Population
2016 Estimated
Population
Employment
Population
Household
Average Income
Median
Household Income
2,813,253
2,956,880
1,563,559
$105,590
$82,432
Suburban Maryland is comprised of two primary and three
secondary counties: Prince George’s and Montgomery have the
largest populations surrounding Washington, DC; Calvert, Charles
and St. Mary's counties are south and have smaller populations.
Overall the markets for office, industrial, retail and land sales for
these areas have either remained consistent or improved, which
directly reflects the resilience of a region in which the Federal
Government is both the major employer and leaser of space.
Office rental rates in Prince George's County decreased slightly
for Class A and Class B space initially in 2011, but bounced back
during the second half of the year to levels similar to or above
the year prior. The second largest employer in the county, Joint
Base Andrews, dedicated a new building this year as part of the
Pentagon’s Base Realignment and Closure program, which will
ultimately grow the base even further and boost the surrounding
economy through retail utilization and contractor leasing activity.
As development surrounding mass-transit continues to gain
steam, the Maryland Department of Housing and Community
Development announced plans to move to a metro oriented office
park in the county. A newly elected County Executive has aimed
to make the county more business friendly in an effort to attract
additional growth.
Industrial rental rates in the county began high, but have
decreased slightly throughout the year. However, rates still
remained higher than the same periods last year. Vacancy rates
decreased slightly.
Retail rental showed a slight but steady decline throughout
the year. Two new retail projects in the county near the Capital
Beltway offered activity, and will continue to deliver new space
throughout 2012 and 2013.
Residential land sales volume doubled in 2011. The
corresponding price per acre increased as well, to prices well
over the 2010 averages. Significant transactions included the
Smith Home Farm, a 624 acre development that sold in Q2.
Montgomery County has remained stable in office rental rates
and vacancy throughout the year. The industrial sections of
the county, which are mostly in Silver Spring and Gaithersburg,
had slightly decreased rental rates, and slightly increased
vacancy rates.
Contact
NAI Hunneman
+1 617 457 3400
Metropolitan Area
Economic Overview
2011
Population
2016 Estimated
Population
Employment
Population
Household
Average Income
Median
Household Income
5,116,940
5,191,387
2,830,913
$91,555
$69,887
The Massachusetts economy was stable in 2011 amid
the uncertainty facing the US and global markets. The
unemployment rate in Massachusetts is 7.3%, down from
8.3% a year ago. Metro Boston’s diverse economy has
helped landlords withstand the economic downturn. Growth
is coming out of the biotech, high-tech and medical
industries. Start-ups feed the demand for smaller blocks of
space, while growing high-tech and biotech companies
search out locations based on amenities and pricing.
Metro Boston’s office market contains 200 million ± SF. The
vacancy rate is 14%, which is unchanged from last year.
Despite the apparent stagnation, there are pockets of activity
where demand is meeting a lack of new supply. The result
will continue to put pressure on rents in certain submarkets
in 2012. Boston’s Back Bay and Cambridge are the tightest
submarkets with single-digit vacancy and high rents. Large
users from these submarkets have begun to look at Boston’s
Seaport District, as a price and lifestyle alternative. This was
evident by Boston’s largest deals, including Vertex’s 1 million
SF lease at Fan Pier in the Seaport.
In the suburbs, Burlington has won many deals including
Ascend Learning’s 90K SF lease. Burlington is attracting
tenants with its selection of Class A product and a superior
amenity base. Large blocks of space are dwindling, so 2012
might see speculative development at sites that have been
on hold for years.
The Industrial market contains 174 million ± SF with 11%
vacancy. While some tenants are consolidating to better their
space situation, demand continues to grow for quality
medtech flex space and good warehouse and distribution
space. A significant lease saw Trader Joes take 132,298 SF
at 30 Commerce Blvd in Middleboro.
The investment sales market has improved since 2009.
Demand is coming from investment groups looking for Class
A assets in low-risk locations. This demand and the low
cost of financing have compressed cap rates for trophy
properties. 33 Arch Street in Boston sold for $65.75 million.
The 600,000 SF tower traded at a reported 4.73% cap rate.
If market f undamentals remain stable, then 2012 should
see continued improvement.
Total Population
Median Age
36
Total Population
Median Age
38
Suburban Maryland At A Glance
(Rent/SF/YR) low High effective avg. Vacancy
doWntoWn offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
N/A
N/A
N/A
N/A
$ 14.50
N/A
N/A
N/A
N/A
$ 50.00
N/A
N/A
N/A
N/A
$ 29.73
N/A
N/A
N/A
N/A
16.00%
Class B (Secondary)
IndustrIal
$ 9.50 $ 51.74 $ 23.39 15.00%
Bulk Warehouse
$ 4.40 $ 22.28 $ 6.72 15.00%
Manufacturing
$ 6.50 $ 9.75 $ 7.94 9.00%
High Tech/R&D
retaIl
Downtown
$ 4.50
N/A
$ 28.94
N/A
$ 6.93
N/A
12.00%
N/A
Neighborhood Service Centers
Community Power Center
$
$
7.46
7.00
$ 60.00
$ 45.00
$ 21.17
$ 20.48
9.00%
6.00%
Regional Malls
$ 12.31 $ 35.00 $ 18.09 2.00%
deVeloPment land Low/Acre High/Acre
Office in CBD
Land in Office Parks
Land in Industrial Parks
Office/Industrial Land - Non-park
Retail/Commercial Land
N/A
N/A
N/A
$ 121,212.12
$ 432,360.74
N/A
N/A
N/A
$ 1,428,571.43
$ 18,281,250.00
Residential
$ 8,582.34 $ 18,281,250.00
Boston At A Glance
(Rent/SF/YR) low High effective avg. Vacancy
doWntoWn offIce
Premium (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
$
$
$
$
$
$
38.00
34.00
23.00
24.00
22.00
17.00
$
$
$
$
$
$
55.00
45.00
30.00
32.00
29.00
24.00
$ 47.00
$ 38.00
$ 27.00
$ 29.00
$ 26.00
$ 21.00
9.00%
12.70%
10.60%
12.80%
16.20%
15.20%
Bulk Warehouse
Manufacturing
High Tech/R&D
retaIl
$
$
$
4.55
5.05
6.28
$
$
$
7.87
8.40
15.87
$
$
$
5.63
5.90
9.11
11.60%
12.50%
13.40%
Downtown
Neighborhood Service Centers
Community Power Center
Regional Malls
$
$
$
$
15.00
9.48
7.13
18.19
$
$
$
$
91.29
32.18
18.13
51.86
$ 47.75
$ 15.30
$ 11.62
$ 26.94
2.60%
7.10%
4.40%
3.60%
deVeloPment land Low/Acre High/Acre
Office in CBD
Land in Office Parks
Land in Industrial Parks
Office/Industrial Land - Non-park
Retail/Commercial Land
Residential
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
105 2012 Global Market Report n www.naiglobal.com
2012 Global Market Report n www.naiglobal.com 105