By Aaron Jodka | June 2017
Have you walked through the Seaport lately? It is truly amazing how rapidly the neighborhood is changing. Decades in the making, the transformation in this real estate cycle has been astounding. Residential is booming, retail is quickly coming on the scene, hotels are popping up, and the office market is thriving – particularly new product.
The chart above breaks down the broader Seaport market into two segments, the brick-and-beam buildings in the Fort Point neighborhood (red line) and everything else in the Seaport, from new product to previous cycles’ development to the Innovation and Design Building, or IDB (blue line).
What stands out is that the Seaport, like Boston overall, is breaking with the marketplace’s traditional wisdom. In recent Boston trends, Class B rents are outperforming Class A downtown, high-rise vacancies are topping low-rise, and Back Bay vacancies are elevated, among other changes. In the Seaport, however, new non-Fort Point buildings are now outperforming. Tenants have voted with their feet, and Financial District tenants such as PwC and Goodwin are choosing new product along the waterfront (Boston Consulting Group will follow suit), while previously suburban-based tenants Autodesk and Reebok have chosen the IDB.
This vacancy relationship could change in a hurry, as Amazon has been linked to a property on Summer Street, which, if leased, would lower the vacancy rate shown by the red line. New ground-up construction that has yet to secure an anchor tenant or fully lease up (121 Seaport, Pier 4), would cause the blue line to spike if delivered with vacancy.
Millions of SF of future development is planned. Once it is all complete, the neighborhood will once again be unrecognizable. Vacancy relationships are likely to flip-flop over time, as the market matures. But now that the weather has turned for the better, take a stroll, Uber/Lyft, Hubway, Silver Line, or water taxi to check out this dynamically shifting submarket.