Life Sciences Keeps Boston as a Top 10 Market
CBRE investor intentions survey leans to Sunbelt, but can't ignore Boston.
Boston remains among the top 10 commercial real estate investors for 2023 despite recent findings from CBRE’s U.S. Investor Intentions Survey, which found that Sun Belt markets are the most appealing.
Dallas heads the list followed by Austin, but Boston, well known as a life sciences hub, continues to show strong market fundamentals in that sector, despite some persistent headwinds that saw vacancy rise slightly to 3.5%.
Driving it, CBRE said, is sublease space coming online in suburban markets during Q4 2022.
Eric Smith of CBRE said in prepared remarks that across the Boston metro area, many private and mid-cap public companies have either put growth needs on hold or have taken a cautious approach to leasing expansion space as funding has become harder to secure and preserving cash remains a top priority.
“Market volatility is likely to continue through the first half of 2023, with sublease space continuing to be added to the market, and new supply coming online,” Smith said.
CBRE Vice Chairman Simon Butler added in prepared remarks that despite rising costs for debt capital and fears of a potential recession, Boston benefits from the “stability of the local economy with the meds and ed’s sectors leading the way.
While there were a handful of headline transactions in Q4, the “new normal” is saturated with re-traded deals and market skepticism unseen for the past two years, according to CBRE.
“However, despite the mounting deal-making challenges, the fundamentals for life science real estate remain strong,” the firm wrote.