BOSTON—Clearly it's a case of the haves and have-nots. Whether it was due to diversity, luck or the percentage of real estate dedicated to healthcare and universities, Boston simply didn't suffer the way many other major cities did during the past economic unpleasantness. And that, of course, means that the upcycle is even richer.

GlobeSt.com sat down recently with three of the major players in the Boston market from Cushman & Wakefield: J.R. McDonald, executive VP of brokerage; Edward Maher, vice chairman of capital markets; and research director Sharon Joyce, to gauge the trajectory of the office and industrial markets in the city and to explore where the market is headed. Here's what they told us:

GlobeSt.com: Give us the 10,000-foot view of the market if you will.

J.R. McDonald: The things that drive real estate in Boston and the advantages we have are clearly the amount of hospitals and universities, as well as the established big pharma groups that want to locate here. There's the presence of the universities, which leads to a very strong, available workforce for a lot of the jobs in the tech and innovation fields. Those are the obvious drivers, in addition to a historically solid base in our CBD of financial, insurance and law services.

But of course, there are downsides. It's expensive to be here. There's a high cost of living, including the high tax rate, and we've seen large financial institutions like Fidelity that have left because the state isn't always willing to cut tax deals for companies like that.

GlobeSt.com: What about employment?

McDonald: Our recovery was much faster than what the middle states in our country experienced. We haven't seen a major unemployment issue here.

Sharon Joyce: I can substantiate that. We're currently at 107% of jobs from the 2009 level. We've added about 158,000 new jobs, which brings us to an overall unemployment rate of 4.5%. Technology has been a strong driver of employment, with 11.9% growth over the past five years, some 27,000 new jobs. Our CBD vacancy rate is among the lowest of major US metros at 9.4%. In L.A. they're over 20%.

J.R. mentioned the universities. We have a very strong educational base in addition to healthcare, biotech and life sciences. In short, we have a full complement of industries in the metro area that allowed us to accelerate out of the recession. Our diversification is a true advantage to our recovery.

GlobeSt.com: Is financial services as an industry taking a back seat? 

Joyce: We've observed over the past couple of years the influx of technology tenants to the CBD. They were actually our dominant share of leasing activity in 2014, taking over 28% of space. They took 369,000 square feet in 2013, and over one million square feet in 2014. A lot of that is driven by young people working in the tech sector and living in the 24/7 environment the city provides. Employers are recognizing that to keep the top talent they have to think about where they're located. In 2004, nearly 50% of all space was signed for by banks, financial services, and legal services tenants. In 2014, that shrank to 20%. There's a dramatically new economy Downtown.

GlobeSt.com: So what's happening on the industrial side?

McDonald: We're not a regional distribution hub. We're an end-of-the-line distribution market. The resurgence in industrial value comes from e-commerce companies coming in to the market to take on that last mile of distribution, along with 3PL companies and common carriers like FedEx or UPS. E-commerce has really helped with the surge in demand in our traditional markets, which are farther out around the 495 belt.

GlobeSt.com: Sharon, you mentioned the 24/7 environment. Tell us about the Millennial movement in Boston. 

Joyce: Millennials are absolutely informing the Boston CBD and the outskirts as well—at Assembly Row in Somerville—there's significant mixed-use development and redevelopment of underused parcels of land. The movement is also evident in some of the higher-performing suburban submarkets like 128 West and 128 North, where developers are looking at mixed-use destination campuses with associated retail and entertainment to serve the workforce there.

Ed Maher: It hasn't been lost on investors what's happening in our Downtown market. If you remember back three or four years ago the Back Bay market was all the rage. Then it shifted to the Seaport District, which [then] Mayor Menino rechristened the Innovations District. A lot of people thought the Financial District was dead and gone. Then those crazy Millennials helped the CBD. Now there's a movement underway to rename the Financial District the Downtown Market, which more accurately reflects the diverse tenant base.

The new mayor has extended the MBTA [Massachusetts Bay Transportation Authority] hours to 2am in the urban areas, and that has shifted the focus more to the Downtown Market. Investors have picked up on that and are looking anywhere that follows the MBTA Green and Red Lines.

GlobeSt.com: What are we looking at in terms of rents on both the industrial and office segments?

Joyce: The overall industrial rent for 2014 was $6.43 triple net per square foot. [Note: All rents here are per square foot triple net]. On the high end, in the core Boston flex market, we're looking at $14.66. Warehouse distribution is $8.82. On the low end, along 128 South and 495 South, rents average $5.10. In manufacturing we're averaging $6.52 across the market. On the high side, in the city, its $7.13 and on the low end—the western markets—it's $5.35.

GlobeSt.com: And office?

Joyce: Our 2014 CBD Class A asking rent is $52.30 per square foot. The interesting thing is that we're still 22% below our 2007 peak, which was $66.84. But we're up 18% from our 2010 low of $44.21. In Kendall Square, which is absolutely on fire with tech, biotech and pharma tenants, we're at $57.16, and that's across all classes. We're 11% above our 2008 peak and 49% above the 2009 valley.

In our Downtown Financial District, the class B market has made great strides, and a lot of that is because non-traditional tenants such as those in the tech sector are looking to migrate to the city. The vacancy rate stands at 6.7% on a direct basis, whereas in 2004 it was at 22.4%. There's been a rapid decline over the past decade. In terms of rents, we're still 12% below the peak of 2007, which was $41.13. Now it's $36.05, which is 20% above the 2011 valley of $30.06.

In the suburbs along 128 West, the class A market is hot. We're at $32.42, with a 6.6% direct vacancy rate, which is remarkably low for a suburban market. We're 14% below our 2007 peak, which was $37.56, and we're 14% above our 2009 valley, which was $28.44.

GlobeSt.com: And Ed, what about cap rates and values—in general terms?

Maher: In the Downtown market, we're in the 3s and 4s. As you get into Cambridge, while it depends on product type, the level of occupancy and in-place rents, we're probably in the 4s and 5s. As you get out to the 128 Beltway, you're in the 6s. Closer to 495, we're talking about 7s and 8s. The value players are out on the 495 industrial beltway, and you're into the 8s and 10s. I don't think there's anywhere else in the country where you'll see a sometimes 600 basis-point cap-rate difference between urban and suburban locations. In all, Boston is one of the most attractive gateway markets in the country.