Boston: Enjoy it and celebrate its diversity - by William Pastuszek

Boston. What a great place, in general. Surely not without its faults. Pricey, high barriers to entry, still a bit exclusive/exclusionary. But such an interesting, intriguing, multi-faceted, complex real estate market. 

What makes Boston real estate so interesting? There’s a lot going in small spaces. Let’s look at some of the fundamentals. It’s not just the traditional saw of “location, location, location,”.

Yes, it sure is. Location, location, location. The Hub it is. Not just real estate; for other things, too. 

Population, employment, and household growth. The city has retained population and has seen growth over the past decade, unlike many post-industrial areas. It is the growth center of New England.

Employment growth is quite as robust as in other faster growth areas. However, Household income is near the top. 

Retail. Marcus & Millichap rate the center city as an area attractive to investors due to strong employment growth. The Boston market shows one of the lowest vacancy rates nationally. 

Office. Solid is a good characterization. Not at the top but in the upper reaches of metros. Office markets, like retail, are being challenged by big changes like co-working, telecommuting, and other trends which reduce the footprint of the average office worker. 

Industrial. Colliers notes that the Boston industrial market, while small in comparison to other metros, remains on a hot streak, absorbing nearly three million s/f in 2017, a huge number in a year without much build-to-suit-driven activity. Vacancies moved down, and rents are soaring. A lot of in-city product has been repurposed. The outlying areas have much aging and obsolete product 

The Neighborhoods. Location, yes?.

Seaport. Old success story but still continues to amaze. Enormous, varied buildout in a short time. And it’s not over. But, something has got to be done about rising sea levels, police jurisdictions, and, parking. 

Allston/Brighton. An amazing buildout story in progress. Barely begun. Biotech tenants increasingly priced out of Kendall Sq. are migrating to nearby Allston/Brighton, where New Balance and Harvard hope to reimagine this quiet and overlooked part of the city into the next biotech hub and a great, new place to live, work, and recreate. Five years from now, expect a distinctly different flavor to spots like Union Sq.

East Boston. Another sleepy part of the city which has been awakening for a long time but has really blossomed of late. The amount of residential development and the pace of construction and product absorption is astounding. Another example of the inevitable spread of demand in the face of tight supply and rising prices.

Downtown. How high? How much higher do prices go for the top end? Where is the light at the end of the tunnel for high end demand?

South Boston and Dorchester. The steady transformation of the meat and potatoes Boston neighborhood continues. 

Just like the South End expansion some years ago was in response to rising Back Bay and Beacon Hill prices, and the growth of Somerville as Cambridge rents became unaffordable, the southern neighborhoods are in play.

Hyde Park. Seriously? It’s happening. The new Roslindale, perhaps?

It’s a great time to enjoy and try to understand Boston real estate. A good time to own some. If you don’t , 2018 rents and prices are tough to swallow, what with a 2004 mentality. Enjoy it right now. Great time to be in the city. Celebrate and respect its diversity. And we haven’t even talked about Cambridge, Quincy, and the suburbs.

William Pastuszek, MAI, ASA, MRA is the principal of Shepherd Associates, Newton, Mass.