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RE

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PBoston

Office

Q3 2013


2/10

Research

VERVIEWVERVIEWOQ3 2013

YTD 2013: Ne Absorpion

2012: Ne Absorpion

Greater Boston Office MarketThe Greaer Boson Oice

marke realized srong

quarerly growh, wih

ba la nc ed abso rp ion across

he Downown and Suburbanlandscapes. Through he irs

hree quarers o 2013, he

oal Greaer Boson marke

absorbed over 1.5 million square ee and experienced 5.2 percen

average asking rae growh. The hird quarer marked he sronges

quarerly perormance o 2013 o dae, wih 670,900 square ee o

ne absorpion and 2.2 percen asking rae growh.

Unlike he pos recession recovery boom period where muliple

large downown relocaions and build-o-suis (Brow n Brot hers,

State Street, Goodwin Procter, Ar nold World wide) skewed saisics

avorably owards Downown and Cambridge, eicien marke

dynamics and srenghening undamenals have shied demand

paerns across Greaer Bosons suburbs, wih every suburban

submarke posing posiive quarerly absorpion.

Noneheless, enan demand remains exremely high hroughou

he Hubs downown submarkes and Cambridge, however rising

rens and burgeoning suburban 24/7 liesyle locaions such as

Somerville, Brighon and Waerown are beginning o lure some

price sensiive enans away rom Bosons core submarkes.

The resul o srong leasing velociy and coninued enan demand

coupled wih limied supply has esablished Boson as one o he

naions mos acive invesmen sale and developmen markes.

Currenly here are well over 5.5 million square ee o oice

and lab space alone acively under consrucion across easern

Massachuses wih millions o square ee waiing in he pipeline as

well as h ousa nd s o ne w resi den ial un is an d rea il spac e.

Direc Vacancy: 12.6%

Q3 Absorpion: 670,900 RSF

Asking Rae: $29.32/RSF

-1,200,000 -800,000 -400,000 0 400,000 800,000 1,200,000

Class B

Class A

Inersae 495

Roue 128

Cambridge

Boson

956,700

1,241,500

(213,400)

68,900

15,700

582,300

1,041,300

(384,000)

-1,200,000 -800,000 -400,000 0 400,000 800,000 1,200,000

Class B

Class A

Inersae 495

Roue 128

Cambridge

Boson(5,800)

122,200

23,500

464,250

39,700

299,900

250,100

303,800


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Research


Boston

Bosons downown oice marke

perormed well hroughou he

hird quarer, measuring 178,000

square ee o ne absorpion as

well wa s 2.3 percen aski ng rae

growh. Somewha surprisingly

he marke was lead by Norh

and Souh Saion which collecively absorbed 162,000 square ee,

reducing heir vacancy raes o 4.1 and 3.7 percen respecively. Trip

Advi sor and is subsidiaries coninued making waves beyond heirbuil d-o-s ui Cene r 128 proj ec in Nee dh am, by a ki ng down roug hly

72,000 square ee a 226 Causeway Sree in Norh Saion.

The Class A marke experienced a sluggish hird quarer giving back

118,500 square ee. The Financial Disric and Charlesown were

he culpris as hey were he only negaively perorming submarkes.

Despie he overall weak perormance, he vacancy rae remained

healhy a 9.1 percen and asking raes mouned growh wih mid andhigh rise rens requenly running ino he $60.00 per square oo

range and above.

On he oher hand, he Class B marke surged orward wih 296,500

square ee o ne absorpion and 2.7 percen asking rae growh. The

marke was lead by he Financial Disric and Norh Saion which

accouned or nearly wo hirds o quarerly absorpion. As a resul

o his quarers robus leasing velociy, he oal Class B vacancy raedipped o 7.8 percen and oal availabiliy measured an impressively

low 13.3 percen.

In addiion o he acive leasing marke, Boson is experiencing a

remendous amoun o developmen aciviy and invesmen sales.

Towards he beginning o he quarer, Pr ic eWater hous eC oo per

Leasing Velociy Endures Summer

Direc Vacancy: 8.6%



Submarke Vacancy

0% 5% 10% 15% 20% 25%

Midown

Mid-Cambridge

Souh Saion

Norh Saion

Fenway

Wes Cambridge

Back Bay

Seapor

Eas Cambridge

Charlesown

Financial Disric

128 Wes

128 Norh

Inner Suburbs

Roue 3 Norh

495 Souh

495 Mass Pike128 Souh

495 Norheas

495 Roue 2

Boson Cambridge Roue 128 Inersae 495


4/10

Research


Cambridge

Cambridge posed 183,500

square ee o ne quarerlyabsorpion which lowered

he direc vacancy rae o 5.9

percen and pushed he average

asking rae up 3.5 percen o

$47.85 per square oo.

Eas Cambridge submied a srong hird quarer, lowering he

direc vacancy rae o 7.6 percen by absorbing 201,500 square

ee. Amaz ons lease a 101 Main Sree coupled wih Alex ion

Phar maceut ical s 31,000 square oo lease a 55 Cambridge

Parkway, Twitters 30,000 square oo lease a 141 Porland See

an d Blackbauds relocaion ino 30,000 square ee a One Canal

Park solidiied he easern submarke. As a resul, landlords

aggressively pushed asking raes 4.9 percen w ih prime riverron

and upper loor spaces commanding well ino he mid and high

$60.00 per square oo range.

Wes Cam br id ge ca rr ied la s quar ers po si i ve leasing ve loci y

ino he hird quarer and absorbed 36,000 square ee, drawing

is year-over-year oal up o 136,000 square ee. The emerging

weser n subma rke has ben e ied r om a growing ameni y base an d

compeiive asking raes in addiion o is superio r accessibiliy and

Cambridge cache. Following Int ui ts relocaion las quarer ino

61,000 square ee a 150 CambridgePark Drive, he submarke

has solidiied is posiion and is poised or he srong growh hamany locals have long orecased.

Meanwhile, on he surace Mid Cambridges negaive 54,000

square ee o quarerly absorpion masks he submarkes

exremely sound undamenals. The submarke was srickened by

M t S i f H lt h d 784 M i l

Route 128

During he hird quarer, he

Roue 128 marke absorbed102,800 square ee, bringing

is year-over-year ally o

179,500 square ee and

raising he average asking rae

o $22.73 per square oo.

The Roue 128 Wes submarke coninued srenghening is hold

aop all suburban submarkes by dropping is vacancy rae o 11.9

percen ollowing 60,500 square ee o quarerly absorpion and

449,600 square ee over he pas year. Amad eus 56,000 square

oo relocaion rom 307 Waverley Oaks o 1050 Winer Sree

in Walham and uniQures 53,000 square oo relocaion ino 113

Harwell Avenue in Lexingon marked he wesern submarkes

larges quarerly ransacions. Walhams leasing velociy showed

ew signs o weakening wih Fl eetmat ic s USA commiing o 27,700

square ee a 1100 Winer Sree, Int el li gent MDXrelocaing rom

Cambridge ino 26,000 square ee 285 Bear Hill Road andFir em anCapital occupying 17,500 square ee a 800 Souh Sree.

Similarly, he Roue 128 Norh submarke posed 75,600 square

ee o ne quarerly absorpion, led by Burlingons emergence

as he norhern suburbs live, work and play epicener. Thermo

Fis he rs 56,600 square oo lease a 300 Jubilee Drive in Peabody

an d MicroLine Surgicals ransiion ino 70,150 square oo a 50

Dunham Road in Beverley marked his quarers larges movers.

Lasly, Roue 128 Souh gave back 33,300 square ee despie

Queen Harbors 14,600 square oo lease a 600 Longwaer Drive

in Norwell and Hall keen Re al Estate s 15,200 square oo lease a

1400 Providence Highway in Norwood. The souhern submarkes

l i i 130 R ll S i C h




Direc Vacancy: 5.9%




5/10

Research


Interstate 495

The Inersae 495 marke

srung ogeher anoher srong

perormance by absorbing 192,200square ee and achieving posiive

asking rae growh. Despie evolving

enan demand or live, work and

play locaions, he suburban I-495

marke generally saisies price sensiive enan demand as well as larger,

expanding irms ha have diiculy inding big blocks o modern space

in he igher Roue 128 and Inner Suburban markes.

The I-495 marke recorded posiive quarerly absorpion across each

submarke, excep or he Mass Pike which gave back 30,300 square ee.

The sronges perormance came rom Roue 3 Norh which measured

158,800 square ee o ne absorpion and over 2.1 percen asking

rae growh. Verizon expanded a Lowells Cross Poin, aking down

anoher 92,000 square ee. Jus o he norh in Billerica, Mett le r Tol ed o

Thornton leased 50,000 square ee a 900 Middlesex Turnpike.

In addiion o Roue 3 Norhs srong perormance, he remaining hree

posiive submarkes collecively absorbed 64,000 square ee. Along

Roue 2, he Nat iona l Avi at io n Acad emy leased 8,000 square ee a 55

Old Bedord Road in Lincoln. In he Norheas submarke, Andover

remained acive wih Charm Sciences commiing o he norhern

suburbs hrough is user purchase o One Riverside Drive.

Despie giving back 30,200 square ee his quarer, he Mass Pike

submarke coninued experiencing asking rae growh and generalposiive momenum as he wesern submarke srenghened along he

Roue 9 corridor paricularly in Naick and Framingham. Alhough no

conribuing o absorpion,ID G Enter pr ises 92,000 square oo renewal

a 492 Old Connecicu Pah in Framingham highlighs he demand or

well loca ed , am en i y ri ch su burban lo caion s.

Recen Signiican Sales




One Liberty Square, Boston

$54,400,000 ($345/RSF)

Buyer: Clarion Parners

One P.O. Square, Boston

$275,000,000 ($661/RSF)

50% Parial Ineres Transer

Buyer: Morgan Sanley

25 Mall Road, Burlington

$77,100,000 ($270/RSF)

Buyer: TA Associaes

N.E. Executive Park, Burlington

$216,000,000 ($209/RSF)Buyer: AEW Capial Mg.

& Charles River Inv.

99 Summer St., Boston

$110,800,000 ($405/RSF)

Buyer: Cornersone Real Esae


6/10

Research

INCOLNINCOLNLQ3 2013

UUPDATESPDATES2013 Recenly Compleed Leases/Sales

Alex ion Phar maceut ical s

31,000 RSF

55 Cambridge Parkway, CambridgeLandlord Rep. - John D. Miller

& Jerey C. Moore

Lawy er s Co ncer ned fo r Lawy er s

6,957 RSF31 Milk Sree, Boson

Landlord Rep. - Brian G. Smallman,Robero Magno & Brendan W. Miller

Tomcat Enterprises

6,800 RSF85 Devonshire Sree, BosonTenan Rep. - Robero Magno

& Brendan W. Miller

Second Nature

5,000 RSF

18 Tremon Sree, BosonTenan Rep. - Robero Magno

& Carolyn Molloy

Ro om & Board

28,745 RSF

One Enerprise Road, BillericaTenan Rep. - Greg Cahill

Execut ive Of fi ce of Hea lt h and Hum an Se rv ices

27,633 RSF220 Forbes Road, Brainree

Landlord Rep. - Ned Halloran& Ellison Paen

The Ninety Nine Restaurants

10,400 RSF14 Gill Sree, Woburn

Tenan Rep. - Rob Cronin

Ro ss Mort gage

7,835 RSF

115 Flanders Road, WesboroughTenan & LL Rep. - Craig MacDonald

& Tim Laham

Cambridge

Boson

277,800 SF287,000SF229,800SF

88,600 SF6

LPC Assi gnments

Lincoln Propery Company has recenly been named

he exclusive managing agen and/or landlordrepresenaive or he ollowing properies:

250 Revolutionary Way, Taunton

160 Gould Street, Needham

1 & 3 Burlington Woods, Burlington

LPC in MA


7/10

Research

ERMINOLOGYERMINOLOGYTQ3 2013

Ask in g Re ntal R ate : he dollar per square oo amoun ha

is quoed by he eniy ha is represening he space being

markeed.

Deliveries: newly compleed produc ha was recenly under

consrucion or renovaion ha are available or immediae

occupancy.

Direct: space ha is markeed on behal o he Landlord.

Flex: produc ha is capable o hosing enans ha vary in

heir use o commercial real esae. Including oice, lab, R&D,

wa rehous e, ma nua c ur ing an d di s ri buion ena ns.

Free Rent: he ime period he enan does no have o pay any

ren, which is agreed upon by he enan and landlord duringlease negoiaions.

Net Absorption: he change in direc vacancy over a measured

ime rame. Includes newly delivered produc ready or

occupancy, bu does no include sublease.

Sublease: space ha is markeed on behal o he curren

Tenan.

Tenant Improvements (T.I.): ypically a dollar per square

oo amoun negoiaed during he lease ransacion ha is paid

o a enan by he landlord, or sublandlord, or he means o

improving he condiion o he agreed upon space.

Total Availability (A.K.A. Overall Availability): all spaceha is available or lease. Includes markeed occupied space,

sublease, and produc under consrucion ha will be delivered

wi h in w o (2) year s.

Vacant Avai labl e: all space ha is currenly available o lease

and immediaely occupy; hereore, space ha is no hosing

a enan. Unoccupied space wih a uure commimen areexcluded.


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