"Companies have been
sitting on the sidelines
knowing they need to
expand, but waiting for
the right time."
Tim Brodigan, SIOR, a vice president with Colliers International in
Boston, MA. Brodigan focuses on the suburban market.
The growth industries of the Boston suburbs, particularly those
around Route 128, have been in the high-technology sector, which has
over the last three decades supplanted older manufacturing firms.
“We are seeing a lot of conversion of second and third generation
manufacturing space into flex buildings with higher ceilings and the
reason for that is low-tech manufacturing is on the decline and high-tech manufacturing is on the rise and the latter needs a more specialized
product,” says Brodigan.
The leasing market has been slow in the Boston suburbs since the
Great Recession, but Brodigan is optimistic for 2013 and beyond.
“The deals will come from high-tech, pharmaceutical, semi-conduc-
tor, and aerospace,” says Brodigan. “There’s a lot of pent-up demand.
Companies have been sitting on the sidelines knowing they need to
expand, but waiting for the right time. They will take up class A office,
flex, and specialty manufacturing buildings.”
Also working the Boston suburban market is Garry Holmes,
SIOR, president of R. W. Holmes Realty Co. in Wayland, MA. Holmes
has been focusing on the transaction market.
“The problem in the suburbs had been the high vacancies which
has finally slipped down to 17 percent,” says Holmes. “If you are right
along Route 128, those numbers have settled in at 13 percent to 14 per-
cent, and if you push further west, the vacancies rise to the low-to-mid
20 percent range.”
The suburban Boston market is finally seeing good fundamentals,
a lot of which is due to expansion by the existing tenant base, Holmes
adds. “That law firm, or accounting firm, or software firm is picking
up that vacant suite next to them. Most of these deals are about grab-
bing another 3,000 to 5,000 square feet to accommodate 12 to 15 more
employees. There’s an awful lot of progress in the suburbs right now.”
The city of Boston has been one of the most desirable investment
markets in the country over the past few years, and, Holmes adds, “we
are just starting to see signs of buyers for suburban office. Cap rates for
properties in Boston are in the three percent to five percent range, while
the suburbs have been trading at the eight percent to nine percent range.
With fundamentals improving, a lot of people will turn to suburban
Distribution centers and suburban office? Is there anywhere in
the country where there is a boom in good, old fashion downtowns?
Actually, there is – in Cleveland.
The old industrial city on Lake Erie has been on a building boom for
the past 36 months. “We have about $2 billion of active construction
projects that have been completed and will be completed over the next
18 months,” reports Brian Hurtuk, SIOR, a vice president with
Colliers International in Cleveland, OH. “We have a new casino
going into an existing building (plans to build a new casino in
five years), new convention center, medical complex, and a new
Cleveland hasn’t seen a new office building in 20 years and
the 500,000 square foot structure under construction is close to
80 percent leased, Hurtuk observes.
One other hot trend for Cleveland: conversions.
“We have a lot of older office buildings that have become
functionally obsolete and they are being converted into apart-
ments and boutique hotels,” he says. “Not only do we get that
space off the office logs, but we are converting to re-adaptive
use. There are more jobs in downtown and for the first time in
the past 10 years, we got businesses moving from the suburbs to
Finally, a central business district story to brag about