Real Numbers on Boston Real Estate

And here come the market reports from the "big houses." I am anticipating 16 variations of the phrase "cautioulsy optimistic". I am expecting the figures to be so aggregated as to make no sense at any local market level. And I can guarantee that no firm will make an actual square footage projection of net growth or decline. I'm not picking on the firm behind this column. Other firms will be worse because the report will be written in Los Angeles or Chicago. But it's time to take a stand for accuracy and for putting your money where your mouth is.



Here's the reality. The suburban markets are still in decline. The A markets in the CBD have registered their 3rd straight quarter of net absorption. In the first quarter of 2010, net absorption was 280,000 square feet and, for the first time in 22 months, this absorption included the B markets. The total amount of available space under construction in the city is a whopping 380,000. That's 380,000 rsf in a 72 million square foot market. We are not building enough space to accommodate our current rate of growth.



I don't care about "availability". I care about what's vacant today. Availability is amorphous—it’s all about the probability that some space may come available in the future. And the CBD vacancy rate is 9.1 %, DOWN, from 9.5 % on January 1, 2010. As to the future, I am projecting net absorption of 450,000 square feet in 2010 and 580,000 square feet in 2011.



As to the financial markets, I guess nobody has paid attention to the stock market or the massive net inflows into mutual funds over the past 18 months, inflows that drive the Boston office market. I guess nobody has paid attention to the fact that productivity levels in Massachusetts are at the highest levels since the statistsic was first measured in the 1950's. Why is this important? Because it is not sustainable and companies will hire and hire quickly.



I am tired of vague, generalistic assessments of markets that provide no insights to local market differentiation and that carry "party line" messages about “challenging times.” I’m bored with companies that never actually stick their necks on the line and state what net absorption WILL BE, not what it was. I'm not cautiously optimistic. I am totally optimistic. And I’m not afraid to put the numbers out there in clear view.



My entire market report will be online within the week.