Q4-2017-MarketReport-WEB

OFFICE STATISTICS DOWNTOWN

Vacancy and Net Absorption

DOWNTOWN

TOTAL INVENTORY (SF)

TOTAL VACANT (SF)

TOTAL VACANCY RATE

Q4 NET ABSORPTION (SF)

YTD NET ABSORPTION (SF)

ASKING RENT ($/SF)

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017

0% 2% 4% 6% 8% 0% 2% 4% 6% 8% 10% 12% 10% 12% 0% 2 4 6% 8% 10% 12%

-200,000 -100,000 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 -2 , -1 , 1 , 2 , 30 , 400,000 500,000 600,000 700,000 800,000 900,000 -200,000 -100,000 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000

Class A

48,818,271

3,717,022

7.6%

219,617

128,951

$62.51

Vacancy and Net Absorption

Class B

20,887,991

1,713,292

8.2%

173,964

40,863

$49.22

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 2 6 3 016 4 6 1 7 2 7 3 7 4 7

CLASS A & B TOTAL

69,706,262

5,430,314

7.8%

393,581

169,814

$58.28

Vacancy and Net Absorption

VACANCY AND NET ABSORPTION

TRENDS • Strong positive absorption in the fourth quarter brought vacancies down to 7.8%. With several large expansions nearly finalized, the Downtown market should see continued improvements in the coming quarters. • The Back Bay is coming into its own, with the tech, e-commerce and coworking sectors driving growth. Wayfair, WeWork and DraftKings are committed to large blocks of space across a handful of towers here. • New construction in the Seaport continues to attract tenants. Aptiv leased two floors at 100 Northern Avenue and Viviant’s lease on the 7th floor of 101 Seaport brought the building to full-occupancy. Cengage Learning is planning to relocate to 117,000 square feet at Pier 4 in late 2018 as well. • Corporate tenants are increasingly looking for flexible lease options within coworking spaces. At WeWork’s newest location, 1 Beacon Street, a single-user is committed to nearly half of the space and Blackbaud recently committed to a full floor in their North Station location at 200 Portland Street.

Q4 2014

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2017

Net Absorption

Vacancy

Q4 2014

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2017

Net Absorption

Vacancy

Class A & B Rents

$70

Q4 2014

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2017

$60

Net Absorption

Vacancy

Class A & B Rents $50

CLASS A & B RENTS

$40

$70

$30

$60

$20

$50

Class A & B Rents $10

$70 $30 $40 $0

• In addition to Amazon’s HQ2 requirement, the e-commerce giant is reportedly in the market for another 500,000 to 1 million square feet in Boston.

Q4 2014

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2017

$60 $20

Class B Class A

• Nordblom is making a big play in the outskirts of Boston. Its 232,500-square-foot speculative development at 321 Harrison Avenue in the South End could break ground in March and they have proposed a massive mixed-use development at the former Globe site in Dorchester.

$50 $10

$40 $0

Q4 2014

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2017

$30

Class B Class A

$20

NOTABLE TRANSACTIONS

$10

RECENT CONSTRUCTION Recent Construction

$0

TENANT

ADDRESS

SIZE

SUBMARKET

TYPE

Q4 2014

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2017

800,000

Relocation/ Expansion

Rapid7

80 Causeway Street

147,000 North Station

Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

700,000

Class B Class A

600,000

Renewal/ Expansion

Recent Construction

JPMorgan

451 D Street

140,000

Seaport

500,000

40 ,0

800,000

20 Custom House Street

Renewal/ Contraction

Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 4 0 6 1 7 2 7 3 7 4 7 1 8 2 8

Safety Insurance

75,411 Financial District

300,000

700,000

20 ,0

600,000

Recent Construction 500,000 10 ,0

WeWork

1 Beacon Street

66,258 Financial District

Expansion

500,000 100,000 600,000 200,000 700,000 300,000 800,000 400,000

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Aptiv

100 Northern Avenue 62,000

Seaport

Expansion

Leased Available

0

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 20 6

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Q1 2019

400,000

www.naihunneman.com

303 Congress Street Boston, MA 617.457.3400

3

300,000

Leased Available

200,000