2016 MARKET INSIGHT REPORT
SUPPLY 11,489,210 SF
VACANCY 4.1%
AVERAGE RENT $65.00/SF
Image Source: Shutterstock
CAMBRIDGE OFFICE
YTD ABSORPTION 31,473 SF
*Arrows Indicate One Year Change
MARKET TRENDS
WALL STREET EFFECT
Understanding 2016 could be a bumpy
ride on Wall Street, large users could be
looking to buy time before committing
to large blocks of space.
BLUE CHIPS STILL MOVING IN
Notable, household brands (i.e. Toyota)
who don’t currently have a presence
in Cambridge continue to compete for
space along MIT’s doorsteps.
TIME TO MOVE EAST
With rents in Alewife for Class A space
eclipsing $45/SF, more companies
are looking to Boston as a cost and
convenience alternative.
STILL A STARTUP COMMUNITY
Incubator and small suites (<5,000 SF)
throughout Cambridge still command a
premium, as activity remains strong.
Cresa Boston cresa.com/boston
CAMBRIDGE OFFICE AVERAGE RENT & VACANCY
RENT ($ | SF)
VACANCY (%)
6.0%
$70.00
$60.00
5.0%
$50.00
4.0%
$40.00
3.0%
$30.00
2.0%
$20.00
1.0%
$10.00
$-
Q3Q3
2013
2013
Q4Q4
2013
2013
Q1Q1
2014
2014
Q2Q2
2014
2014
Q3Q3
2014
2014
Q4Q4
2014
2014
Q1Q1
2015
2015
Q2Q2
2015
2015
Q3Q3
2015
2015
Q4Q4
2015
0.0%
2015
NOTABLE TRANSACTIONS
TENANT
ADDRESS
SIZE (SF)
HubSpot
25 First Street
218,000
TYPE
Renewal/Extension
Akebia Therapeutics
245 First Street
40,000
Expansion
Ares Allergy
55 Cambridge Parkway
16,000
Relocation
Car Gurus
55 Cambridge Parkway
30,000
Expansion
2016 Market Insight Report 1
CAMBRIDGE OFFICE
DEVELOPMENT PIPELINE
1
3
8
10
EAST CAMBRIDGE DEVELOPMENT SITES
4
9
5
Permitted Development Sites (Total SF: 2,682,000)
Non-Permitted Development Sites (Total SF: 2,714,700)
Under Construction/Committed (Total SF: 2,196,500)
2
6
11
7
DEVELOPMENT PIPELINE
DEVELOPMENT
DEVELOPER
SIZE (SF)
STATUS
1
North Point
Divco West
1,800,000
Permitted Development Site
2
Cambridge Center/North Garage
Boston Properties
430,000
Permitted Development Site
3
40 Thorndike Street
Leggat McCall Properties
452,000
Permitted Development Site
4
55 Broadway
Volpe Transportation Center
(Developer TBD)
5
Main Street/MIT
6
399 Binney Street
7
8
1,600,000
Non-Permitted Development Site
MITIMCo
980,000
Non-Permitted Development Site
Divco West
134,700
Non-Permitted Development Site
181 Massachusetts Avenue/22 Windsor Street
Novartis
647,000
Under Construction/Committed
50 & 60 Binney Street
Alexandria Real Estate Equities
541,000
Under Construction/Committed
9
100 Binney Street
Alexandria Real Estate Equities
431,500
Under Construction/Committed (223,000 SF)
10
75-125 Binney Street
Alexandria Real Estate Equities
339,000
Under Construction/Committed
11
610 Main Street (Phase 2)
Pfizer/MIT
238,000
Under Construction/Committed
MARKET PREDICTIONS
1
Asking rents will continue to hold all-time highs
throughout Cambridge.
2
The world’s largest companies, across all sectors,
will continue to seek a research & development
post in Kendall Square.
3
Homegrown tech companies, if given the
opportunity, will prefer to stay and expand in
Cambridge vs. leave.
4
Startups will continue to seek shared space
options or scatter along the Red Line to Alewife,
Downtown Crossing, or South Station.
Cresa Boston cresa.com/boston
2,682,000 SF
2,714,700 SF
2,196,500 SF
35%
36%
29%
Permitted
Development
Sites
Non-Permitted
Development
Sites
Under
Construction/
Committed
EAST CAMBRIDGE DEVELOPMENT PIPELINE
2016 Market Insight Report 2
CAMBRIDGE OFFICE
MARKET INSIGHT
North Point Aerial
North Point Rendering
Image Source: boston.curbed.com (both)
OWNER’S MARKET IN
STILL-HOT CAMBRIDGE
L
ittle has changed across the Charles:
Cambridge’s office market is still red hot.
While Cambridge has seen a slight dip in
the volume of active tenants, the market
as a whole continues to outpace growth
and demand compared to the rest of the
region as companies’ desire to grow or
establish a presence there continues. Blue
chip technology and life science firms are
competing for every space, causing average
asking rates throughout all Cambridge
submarkets and eclipsing previous record
highs. In turn, many tenants are being driven
to cost-effective alternatives in Boston and
the surrounding suburbs.
Meanwhile, strong organic growth,
combined with the inward migration of
notable, out-of-market tenants, has driven
inventory to an all-time low. Car Gurus
recently committed to another 30,000 SF
at 55 Cambridge Parkway, nearly doubling
its footprint in that part of town. In Lechemere,
HubSpot proclaimed its commitment to
Cambridge by renewing its lease for 119,000
SF at 25 First Street and grabbing an
additional 67,000 SF for expansion. Finally,
the trend of new household names planting
a flag in Cambridge continues as Toyota
committed to 15,000 SF at One Kendall for
its proximity to, MIT’s research labs.
TENANTS IN THE MARKET
INVESTMENT SALES
TENANT
ADDRESS
BUYER
SIZE (SF)
So, if you’re a larger user looking for space
in Cambridge, what’s left? Short answer:
not much. Some notable tenants, including
Akamai and Biogen, are working through
long-term planning and paying close
attention to a few key development sites in
East Cambridge, such as MIT’s Main Street
development, the federal government’s Volpe
site, along with Divco’s new energy into North
Point and OKS. Other than that, inventory for
larger tenants remains microscopic.
As a result of the fierce competition for
space, developers are in the enviable
position of selecting between office and
lab users. A company opting to stay in
Cambridge has likely weighed its necessity
to stay vs. contemplating a move. Although
delivery and occupancy is still 3+ years away
(even longer in some cases), developers
remain confident they will ultimately get to
choose the tenant they want.
Akamai Technologies
600,000
200 Cambridge Park Drive
Morgan Stanley
Biogen
250,000
NorthPoint
Divco West
Car Gurus
30,000
Canal Park
TBD*
Pulse (GE)
30,000
*currently on the market
Seven Bridges Genomics
20,000
Wuxi/Nexcode
20,000
Cambridge Biomarketing
20,000
Cresa Boston cresa.com/boston
PRICE/SF
AREA (SF)
$746
221,850
$66 (land deal)
4,500,000+
$750+
775,000
2016 Market Insight Report 3
CAMBRIDGE OFFICE
STATISTICS
16
3
Bro
les
Ma
ss
t
th
Hw
y
LECHMERE
STATION
Ave
2
T
r St
Main St
Bro
ad
T
St
Rive
CENTRAL
SQUARE
STATION
oo
kli
ne
KENDALL
STATION
Br
MIT
Porter Square Station, Cambridge, MA
T
St
2
dge St
93
ire
R iv
er
ay
Cambri
sh
mp
Ha
r
Cha
adw
3
Mc
Gr
a
1
Av
e
T
nd St
Kirkla
Cambri
dge St
ial
HARVARD
UNIVERSITY
r
ubu
Mt A
n St
HARVARD
SQUARE
STATION
erc
16
28
St
St
ALEWIFE/WEST CAMBRIDGE
Som
ervil
le A
ve
on
ac
dA
ve
99
MID CAMBRIDGE
Be
Brattle
Massachuse
tts Ave
16
co
r
?
LECHMERE
T
PORTER
SQUARE
STATION
Co
n
KNOW
KENDALL
2
ct S
ord A
ve
ve
sA
Conc
KEY
ett
Cambridge Park Dr
DID YOU
28
wa
r
ial D
or
Mem
y
mm
T
38
T
DAVIS
STATION
Co
Ma
Alewife Brook P
ky
ALEWIFE
STATION
16
s
hu
ac
ss
Tpk
e
spe
Con
cor
d
Pro
2
28
3
3
Because the Porter Square station
was made out of rock rather than
clay, it is built much deeper into
the ground than other stations. As
a result, there are 199 steps in the
station, and many long escalators.
Fact Source: cambridge.com
Image Source: universalhub.com
90
SUBMARKET
MARKET SIZE (SF)
VACANT
SUBLEASE
AVAILABLE
CLASS A RENT/SF
CLASS B RENT/SF
KENDALL
4,242,406
2.6%
0.4%
3.7%
$80.00
$72.00
LECHMERE
1,817,707
6.8%
4.3%
12.5%
$65.00
$55.00
MID CAMBRIDGE
2,959,328
1.2%
0.7%
2.4%
$58.00
$47.00
ALEWIFE/WEST
CAMBRIDGE
2,469,769
7.9%
4.0%
12.6%
$45.00
$35.00
11,489,210
4.1%
1.9%
6.7%
$68.00
$60.00
TOTAL
About Cresa Boston
For more than 30 years, Cresa has served as an objective, stable business partner
to Boston-area commercial tenants. We join our clients’ teams, working to align their
business plans and their real estate needs, increase their productivity, and consistently
save them money — results that have earned us numerous industry awards along the
way. Our brilliant team of real estate advisors, project managers, strategic planners,
analysts, and space planners listen to tenants’ needs, meticulously research market
conditions, firmly negotiate terms, and manage the design and construction of
projects to customize the best possible occupancy solutions.
We are Cresa – The Tenant’s Advantage
Cresa Boston cresa.com/boston
CONTACT
For more information about Cresa
Boston and the Cambridge Market,
please contact:
Cresa Boston
200 State Street, 13th Floor
Boston, MA 02109
+FOLLOW US
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media channels often to
stay up on current market
trends and availability.
t: 617.758.6000
cresa.com/boston
2016 Market Insight Report 4