Boston is facing a shortage of available office space. As the demand continues to rise, developers and investors are constantly considering the various factors driving Boston’s commercial market. We recently attended Bisnow Boston’s State of Office event to hear some of Boston’s developers and investors discuss the current outlook of the commercial market, office leasing and tenant demands. Here are some of our key takeaways from the event:
Three market driving factors
There are currently three driving factors that attract tenants in Boston ─ young talent, access to transportation and proximity to academic institutions. When looking at the current office market, Kendall Square is a prime example of this trifecta. Since Kendall Square has almost no vacancy, tenants are looking to other neighborhoods more like Allston and the Seaport as viable options. According to the panel, developments only need to hit two out of the three driving factors to be successful, but Allston has the potential to hit all three if the MBTA improves transportation access.
Transit improvements and affordable housing are a necessity
The city’s transit system is a primary obstacle that Boston faces to make life more accessible for residents on a daily basis. Improving the transit system will create a better quality of life for both tenants and employees. However, another extremely important need is housing. Although improved transit access may convince tenants to look for office space in Boston, the lack of affordable housing may cause those companies to relocate in the future. Boston needs to have a regional approach to affordable housing to capture tenants’ interest.
Co-working space isn’t going anywhere
For tenants who may not be looking for a standard 10-year office lease, co-working spaces offer a viable solution. The rise of major companies like WeWork has led to the desire of a flexible office culture. WeWork is expanding its presence in Boston due to its success, and other co-working spaces have started to open around the city. As discussed in the panel, one of the benefits of co-working is that it also offers a sense of community, especially for employees who are not part of a large company, or work remotely.
Create an environment with more than just office space
Tenants are heavily weighing the importance and accessibility of amenity spaces that can be used by all employees. Developers need to be prepared to create experiences for the building’s community, which should be in line with the needs of a perspective client when building on commercial floorplates. Offices in this day and age are more like hotels with inviting lobbies, fitness facilities and food halls. Tailoring your space is a real differentiator for tenants looking to sign a lease.
Technology has shifted the workplace
Technology is one of the main reasons the workplace industry has shifted in recent years. Reflecting on the last decade, many of us couldn’t physically work from home. Now, it’s crucial to have flexible workspaces and remote technology options such as laptops and work cell phones in order to attract young talent.
Boston’s office market is constantly changing, and we’re excited to see how developers, investors and tenants adapt and react in the next few years.