Job growth expands greater Boston development
Retail space expands to northern submarkets
An increasing number of jobs signals a real estate boom in the greater Boston area, according to Bankers and Tradesman magazine.
Employers are expected to increase the labor pool by 55,000 jobs in 2016, a 2.1 percent advance over the prior year. The largest growing sectors are technology, bioscience and professional services, subsequently giving a direct boost to the retail sector.
Developers will add about 1.6 million square feet of retail space to the Boston market, a majority of which will be near urban mixed-use projects, consisting of pre-leased single-tenant offerings, according to Tim Thompson, regional manager at Boston Marcus & Millichap, a commercial real estate investment firm.
Nearly 300,000 square feet of retail space is under construction at the former Boston Garden site, along Causeway Street and on the West End/North End border. Once completed, there will be a new grocery store, a 15-screen movie theater and underground parking. The project will include three towers that will house nearly 2 million square feet of retail, office, hotel and residential spaces, reports Thompson.
But a majority of new retail development is occurring in the northern submarkets, away from the tight vacancy and rent growth core area of downtown. However, that trend could follow to those areas as well. In Cambridge and the South Shore, existing space will be absorbed to support development, maintaining a tight metro vacancy averaging 3 percent. With the expected net absorption of approximately 2.5 million square feet, the average metro vacancy will tighten to its lowest point in a decade, down 40 basis points over the year to 3.1 percent. To give some perspective, in 2015, vacancy tightened just 10 basis points.
The growth has resulted in increased investor interest in the greater Boston area, especially in grocery anchors and drugstores.