The vibrancy here and in Boston’s other western suburbs contrasts with many of the dying downtown office markets, where once-thriving towers are sparsely occupied and businesses struggle to get employees back to their desks. is. free muffin promise and face-to-face interaction.
Meanwhile, suburban office buildings in other parts of the country are still sucking. Vacancy rates in the first quarter of 2022 will be higher in suburban offices than in the central business districts of Chicago, Charlotte, N.C., Detroit, Philadelphia, Tampa and Washington, D.C., according to real estate firm Jones Lang His LaSalle. rice field.
But the Boston area looks different, thanks to strong demand from biotech companies and employers under pressure to locate offices closer to workers who no longer want to commute to the city.
“If I owned a building, I’d be much happier in the suburbs than downtown,” said Greg of the Charles River Area Chamber of Commerce, a business group with members in Wellesley and his wealthy neighbors. Chairman Liveman said. Including Newton and Needham.
More than half of Greater Boston’s office submarket, including Cambridge, has seen a decline in available space. This is mainly due to the biotechnology boom.Developers looking to cash in have Converted an office into a lab at breakneck pace — first approach Kendall Square, then head to recent hotspots like Waltham, Watertown and now Wellesley. The average asking rent across Greater Boston is now over $26 per square foot as the supply of suburban office space has decreased dramatically. The real estate company Colliers Show.
“If all the proposed conversions come to fruition, suburban occupancy could be the highest it’s been in 20 years,” said Jeffrey Myers, research director at Colliers.
Philip Dorman, co-founder of Greatland Realty Partners, said:
This shift may be due, in part, to the early pandemic rush by city dwellers to suburbs and suburbs. more people traveled to destinations than arrived in cities. Postal service data.
With just 3 million square feet of office space compared to Boston’s 67 million, Wellesley is a case study of the nuances behind it. local Suburban Office Success. One of the wealthiest communities in the state, with a median household income of $213,000Wellesley has an abundance of white-collar employees with Zoom setups that allow them to work from home.
But that office market lives on.
With labor shortages, companies want to set up offices close to where their employees live. Professional services firms such as lawyers and accountants have a foothold in town they can’t afford to lose, and landlords vie for positions.
Two-thirds of Wellesley’s office buildings have recently changed ownership or been for sale, said Elizabeth Holmes, director of corporate services at RW Holmes Realty. She operates a number of small, older buildings, about 20 of which are currently available. (Multiple calls to Haynes’ office went unanswered.)
Wellesley has also attracted some high-profile sales. Beacon Capital Partners has purchased 93 Worcester St. Former headquarters of Harvard Pilgrim Health Careat $111.5 million in September, transforms 40,000 square feet To the life science space. His second property across the street, Park 9, may soon follow a similar path. and Wellesley Office Park — 120,000 square feet on Walnut Street — sold Sold to Lincoln Property Co. for $36.6 million in December.
Holmes added that new owners have pushed up rents as office space availability near Route 128 has declined. His Walnut Street office has risen from $30 after the sale to $40 per square foot, and Beacon Capital Partners previously listed the floor at over $60.Last year he was in the mid-50s. The conversion to a lab has been completed.
Other buildings are being renovated to attract employees who are now accustomed to working from home. 2021, Hannemann, a real estate company, has transformed a former Roche Brothers supermarket into: 70 Hastings StreetA multi-tenant office site with electric vehicle charging stations and a cafeteria. (Agent Hunneman did not respond to a request for comment.)
Rising suburban rents could also be a result of higher construction costs due to inflation and supply chain disruptions, said Adam Meixner, senior partner at commercial real estate brokerage firm 128 CRE.
Still, the big picture is complicated.
Driving down Route 9, you can see that the office parking lot is mostly empty, even though Route 128 is approaching 2019 levels and above last year’s numbers. Massachusetts Department of Transportation. Commuter train traffic in and out of Wellesley is well below pre-pandemic levels, so the city is setting up drive-in movies in station parking lots before the once-evening rush hour. said Bob Brown, the resident behind it.community news site The Swalsley Report.
And some companies are shrinking their office needs as they need to adapt to a hybrid future. Sun Life Financial, which employs 3,500 people, has reduced its office space in Wellesley. announced last August. do not consider the building to be the headquarters.
Tom Skelly, Gibson Insurance’s vice president of sales and operations for DeLand, said despite an increase in employee numbers over the past two years, the company has doubled down on the Wellesley space during COVID, totaling 40. It said it had shrunk by %.
“People come in at different times and on different days,” Skelly said. “Some younger employees are commuting back from the city.
Amy Friglietti, the town’s deputy executive director, called the situation in Wellesley and beyond positive. She said it’s changing faster than traditional skyscrapers.
“We are in transition right now,” added Friglietti. “The town is in a position to decide what they want for the future.”