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Downtown Boston is made up of the Financial District, Back Bay, South Boston Waterfront, North Station, South Station, and Charlestown.  Boston is the urban center of the region and the economic, political, and cultural “hub” of New England.  Financial services companies, law firms, and professional and business services firms dominate the office market.  Boston is also world renowned for its medical institutions, home to several of the country’s top hospitals, and its universities.  Surrounded by the Boston Harbor to the East, and the Charles River to the North, Boston has a lack of developable land and a stringent regulatory environment that make it a notoriously difficult place to develop commercial property.  Boston’s core submarkets, which house most of its largest tenants, are the Financial District and Back Bay, while the emerging South Boston Waterfront submarket has the most potential for future growth and development. 

While the U.S. economy may have already entered into recession, the same cannot be said for Boston. The city is fairing far better than other metro areas and thus far in 2008 remains active. The healthy market fundamentals established in 2007 are mostly unchanged, as positive absorption offsets the arrival of new sublease space. In the second quarter, Boston experienced 166,740 square feet of positive net absorption which helped counteract a negative first quarter, bringing the year-to-date total to a positive 20,942 square feet.

The South Boston Waterfront and the Financial District saw the largest transactions of the quarter. Wellington Management signed a 15-year, 450,000 square feet lease to anchor Boston Properties’ development at Russia Wharf. Although the relocation will not occur until 2011, it is the largest lease recorded in Boston since 1995 and a major win for new construction projects. The transaction also increased Wellington’s footprint in Boston by 6.5%, further solidifying the company’s role as one of Boston’s largest employers. State Street Corporation, another key Boston employer, signed a lease to relocate from Lafayette Corporate Center to 162,000 square feet at 100 Summer Street. Also generating a lot of buzz was JP Morgan’s decision to relocate from 73 Tremont Street in the Financial District to Seaport Center, a tribute to the vitality and convenience of the South Boston Waterfront office market.

LEASE

Wellington Management Russia Wharf- 530 Atlantic Avenue
450,000 SF
New-Relocation

State Street Corporation
100 Summer Street
162,000 SF
New-Relocation

JP Morgan
Seaport Center-451 D Street 104,000 SF
New-Relocation

SALE

53-75 State Street, Boston January 2008
$522,500,000 ($550/SF)

950,000 SF

50 Milk Street, Boston
April 2008
$170,000,000 ($619/SF)
274,446 SF

285 Summer Street, Boston April 2008
$140,200,000 ($263/SF) 54,000 SF