What color is your lease?

What is a green lease?
How can you tell?
How much will it cost?

Some of the concepts we examine in this issue of LeaseFOCUS include the definition of a green lease, tenant concerns and key lease terms to be aware of as you consider sustainability aspects of your leasing strategy.  

Click here to view the report. 

Year End 2011 MarketWATCH Report

Sporadic job growth was greater Boston’s most significant disruption in 2011 – as it was in most major US cities.  However, because it is insulated by demand from healthcare, education and technology, the region’s economy is stabilizing.  While it will likely be another 12 months before we see material job growth, it is important to note leasing activity is still at normal levels. 

Click here to to download the report.

Season’s Greetings

During this holiday season, we wanted to pause and say thank you for all your support.  Wishing you and your family a happy Holiday Season! 
All the best, your friends at Cassidy Turley FHO.  http://www.mdoerr.com/Cassidy-Turley-FHO/holidaycard7.html

Winter 2011/2012 BioWATCH Report

Local biotech firms, particularly those in the early and later stages, are cultivating partnerships with big pharma, leading to an increased presence of publicly traded pharmaceutical companies in the state of Massachusetts. However, while the tenant landscape is changing, the commonwealth’s life science sector is obviously undeterred – proven by its continued growth and subsequent demand for space.

Click here to download the Winter 2011/2012 BioWATCH Report.

 

Slow & Bumpy & Occasionally Scary

By Kevin J. Thorpe, Chief Economist 

 

The U.S. has avoided another recession, but, at the moment, economic conditions could not be more uncomfortable. The third quarter Real GDP numbers – an annualized growth rate of 2.5% – were actually quite solid. Best of all, one of the details in the report, a measure called real final sales, revealed that demand from both consumers and businesses grew at a rate of 3.6%; this is triple the rate of growth compared to the first half of 2011. It wasn’t just the GDP numbers that showed improvement.

Real GDP Forecast

We also found out in September that retail sales registered their highest monthly gain since February of 2011; we observed equity markets rally 7% in October and the CBOE VIX move into more stable (and less scary) territory; and, we noted the US economy produced 103,000 jobs in September. All and all, the latest data on the U.S. economy has been very encouraging.

 

But the economic challenges are far from over. The debt-overhang in the U.S. economy continues to minimize growth prospects, which makes the U.S. extremely vulnerable to external shock. This is why we see U.S. consumer confidence plunge whenever anything strays from the recovery script. The Conference Board’s Consumer Confidence Index® fell to 39.8 in October – consistent with recessionary levels. U.S. consumer psyche is hanging on by a very thin thread. And for now, consumers have many reasons to be fearful and skeptical. The European Sovereign Debt crisis remains the most imminent threat. It is easily the biggest unknown in our modeling for the U.S. economic outlook.

 

For the property markets, a slow, deleveraging recovery, although unspectacular, is not so bad either. In fact, commercial real estate has already demonstrated for a solid 18 months that it can perform reasonably well in the throes of a deleveraging recovery. Since April 2010, the U.S. office sector has absorbed 61.6 million square feet (msf), the industrial sector has absorbed 91.5 msf and the apartment sector has absorbed 324,000 units. For office and industrial, the current pace of demand is not far off from pre-recession levels (2005 & 2006), and the apartment sector is registering the strongest levels of demand since the technology boom of the later 1990’s.If it continues to be a slow and bumpy recovery, we’ll take it. Let’s just try to avoid scary for a little while…

 

You can access Cassidy Turley’s Third Quarter U.S. Forecast Report here.

Construction Costs Report – October 2011

Private sector construction has generally been trending upwards since March of 2011. After dipping slightly in July, private construction spending rose 0.4% in August and is 0.9% higher than its level in August of 2010. Now that the dust is settling – following the uncertainty surrounding the debt ceiling debate and the S&P downgrade – projects appear to be moving forward again.

To download the report, please click  here.

Technology: A Beacon of Hope – October 2011

At a time when 40% of economists surveyed by Moody’s predict the US economy will slip back into recession; at a time when the IMF revised down their global GDP forecast by nearly 1 full percentage point from the trajectory it was on just five short months ago—the technology sector is experiencing staggering growth.  

 

Written by Cassidy Turley’s Kevin Thorpe, Garrick Brown and Danielle Kingsley. 

 

Download File »

Cassidy Turley FHO Releases Q3 2011 Market Statistics

October 3, 2011 – Cassidy Turley FHO, a leader in commercial real estate services with extensive experience in the greater Boston office market, today released its quarterly Marketwatch research that tracks the performance of the commercial real estate market in Boston, Cambridge and the suburbs. 

Preliminary figures from the third quarter indicate that leasing activity is slowly picking up, with the majority of executed deals falling into the 5,000 to 15,000-SF range. However, as has been the case for the first three quarters of 2011, meaningful employment growth remains elusive.  As a result, availability remained elevated across most submarkets and while pockets of activity are emerging, absorption is still less-than-healthy across most of the suburbs. 

Downtown Boston posted positive absorption for the third consecutive quarter while Cambridge experienced negative absorption in the lab sector, but positive absorption in the office market – predominantly due to a flurry of small and mid-sized deals executed at One Broadway in East Cambridge.  Activity in the suburbs was mixed – R&D activity remained essentially static but office sector activity began to pick up.  Despite significant negative absorption in the first half of 2011, we expect the execution of deals in the suburban pipeline to balance out the negative activity of the first half of the year.

Boston

• Totaling 580,551 SF year-to-date (YTD), net absorption remained positive for the third consecutive quarter.  This is a marked improvement over 12 months ago when absorption totaled (615,779) SF YTD.
• As we saw in the second quarter, Charlestown, Fenway and Midtown were the only Boston submarkets to post negative absorption at (118,100) SF, (66,682) SF and (69,281) SF, respectively. 
• At 382,883 SF, absorption in the Financial District has shown significant improvement over 12 months ago when it stood at (455,917) SF.  While several deals over 50,000 SF have been inked so far this year, absorption is largely attributable to a flurry of activity in the 5,000 to 15,000 SF range.
• Despite positive absorption, overall availability in Boston remained flat since year-end 2010 – increasing 10 basis points to 18.0%.  This is due to the first quarter delivery of 170,000 vacant square feet at the 760,000-sf Atlantic Wharf. 
• Supply in the Back Bay remained tight, posting an overall availability rate of 9.5% for the second consecutive quarter – down from 11.5% 12 months ago.
• As the protracted recovery continues, a few submarkets have witnessed a notable decline in availability since year-end 2010: Government Center decreased 2.6 percentage points to 17.6% while North Station decreased 4.5 percentage points to 16.8%.
• At $41.61 PSF, overall asking rents have posted a 4.1% increase year-over-year.
• The ever-shrinking supply of quality space in the Back Bay has caused Class A asking rents in the submarket to increase dramatically.  The current weighted average asking rate of $57.60 PSF represents a 25 basis point increase over last quarter and a staggering 21.3% increase year-over-year. 
• The Financial District also continues to show segmentation between Class A space and Class B and C.  While Class A asking rents have increased 2.5% in the past 12 months to $47.46 PSF, Class B and C rents have both declined 1.5%, since Q3 2010.  However, rents appear to be bottoming out and will likely plateau through the end of the year.

Cambridge

• The Cambridge office market closed the third quarter of 2011 with a 14.2% availability rate.  This represents a decline of 1.3 percentage points quarter-over-quarter (largely due to Pegasystem’s commitment at One Rogers Street and a handful of small and mid-sized deals at One Broadway), and a decline of 1.7 percentage points year-over-year. 
  • In the lab market, availability also increased 70 basis points over year-end 2010 to 16.0%.   This is mainly attributable to Shire’s space coming online at 700 Main Street in East Cambridge in the second quarter.
  • Overall asking rents for office space averaged $38.83 psf, jumping 8.0% in the past 12 months.
    • At $50.35 psf NNN, asking rents for lab space have increased 7.8% in the past year.
    • Year-to-date absorption in both the lab and office sectors was 62,065 SF and (57,030) SF, respectively. Negative absorption in the lab sector is a result of Shire relocating in the second quarter – demand for space (both office and lab) in Cambridge has remained consistent throughout this economic downturn.

Suburbs

• The suburban office market posted negative net absorption of (83,817) SF YTD. Erosion appears to be moderating – 12 months ago YTD absorption totaled 213,569 SF.   Negative office absorption is driven by two new large availabilities coming online in 495 North in the second quarter.
• Also negative, overall suburban R&D absorption totaled (253,480) SF YTD.  This represents a slight improvement over Q3 2010, when R&D absorption stood at (451,393) SF.
• While availability in the suburban office market has increased only 20 basis points (to 23.0%), since year-end, there is still a significant gap between supply and demand.  The most notable increases in availability occurred in 495 North (4.5 percentage points since Q4 2010) and 3/24 South (3.5 percentage points).
• At 30.5%, R&D availability has remained stable – up 1 percentage point year-over-year and up 50 bps since year-end 2010.

About Cassidy Turley

Now that FHO Partners is a part of the Cassidy Turley family, we wanted to share an overview of the company.  In learning more about Cassidy Turley, we feel it will be clear why we chose to join the firm.

Cassidy Turley has come a long way since its official launch in March 2010, when nine firms joined forces in a bold move to form one company.  Today, Cassidy Turley is a leading commercial real estate services provider with 3,000 professional in 60 offices nationwide.  The company represents a wide range of clients—from small businesses to Fortune 500 companies, from local non-profits to major institutions.  Cassidy Turley completed transactions valued at $18 billion in 2010, manages 455 million square feet on behalf of private, institutional and corporate clients and supports over 25,000 domestic corporate services locations.  The company serves tenants, investors and owners with a full spectrum of integrated commercial real estate services—including capital markets, tenant representation, corporate services, project leasing, property management, project and development services, and research and consulting.  In addition, Cassidy Turley ranked in the Top 10 on Lipsey Co.’s Commercial Real Estate Top Brands Survey.

In addition, through its partnership with GVA, the founder and majority shareholder of GVA Worldwide, Cassidy Turley provides global reach beyond North America to more than 70 offices in over 25 countries across Europe and Asia-Pacific.  Over the past year, Cassidy Turley’s Corporate Services teams have transacted 181 international assignments that span the globe. 

The firm continues its aggressive “better, not bigger” growth strategy of growing along with its clients. The Boston metropolitan area is considered key to this plan and we at FHO are proud to join colleagues who are market leaders in their respective geographies and practices. 

Given Cassidy Turley’s expansive geographic coverage and ability to provide our clients with services beyond our current capabilities, we are confident we have found the perfect fit for FHO Partners.

Click here to visit Cassidy Turley’s website.

The Boston Globe Features FHO Partners – Cassidy Turley Merger

On Thursday, September 15, The Boston Globe featured FHO Partners in an article announcing our merger with Cassidy Turley.  We are thrilled to join this leading CRE services provider.  We see our partnership as critical to the future success of our business, as it will allow us to provide expanded services with the same level of excellence our clients have come to expect.  As Cassidy Turley FHO, our team will also have a broader reach and better platform to help our clients expand into new markets both nationally and abroad.  While our name has changed, our commitment to excellence in client service remains the same.  We are excited to embark on this new chapter in our company history!

To read The Boston Globe’s full article click here.