Boston CBD

Year-End Review
Over 2.5 million square feet of leasing activity occurred in 2014 in Bostons central business district (CBD) 75% of this

activity was within Class A assets

Average deal size was 13,226 square feet, down from 2013s average of 16,191 square feet
54% of leases signed in 2014 were for a lease term of six years or more a 10% increase from 2013 totals
Absorption was positive for the 12th straight quarter, as landlords posted 1.3 million square feet during the year, with a

three year run totaling 3.5 million square feet of positive absorption
Total vacancy for the CBD stands at 9.8%, a 350 basis point decline during this same 12 quarter stretch
Close to 2 million square feet of new development was delivered in 2014 Seaport saw the completion of One Channel

Center Street and Fan Pier while the Financial District welcomed 10 Summer Street
Construction remains active, especially for build-to-suits, with over 1.5 million square feet under construction 2015 will

see the completion of Lovejoy Wharf and 101 Seaport Boulevard, while in 2016 we anticipate delivery of 100 Northern
Avenue, 300 Cambridge Street and 888 Boylston Street
Average asking rents for CBD Class A space continued to climb, reaching $56.02/sf, while Class B space rose to $40.29/sf

the Back Bay continued to demand the highest average asking rents of all the CBD submarkets, now averaging
$56.67/sf, followed closely by the Financial and Seaport Districts, at $52.33/sf and 44.03/sf, respectively
Largest CBD 2014 Leases
Tenant
Analysis Group

Address

Submarket

Square Feet

Prudential Center

Back Bay

165,000

75 State Street

Financial District

125,000

Prudential Center

Back Bay

95,000

Liberty Mutual

222 Berkeley Street

Back Bay

80,000

Partners Healthcare

Lafayette City Center

Midtown

175,000

10 Summer Street

Financial District

140,000

CDM Smith
Edwards Angell Palmer & Dodge

Primark
Sonos

Lafayette City Center

Midtown

170,000

State Street

Copley Place

Back Bay

125,000

Wayfair.com

Copley Place

Back Bay

165,000

Federal Reserve Plaza

Financial District

75,000

Wolf, Greenfield & Sachs

Source: Newmark Grubb Knight Frank

Boston CBD
Statistical Summaries

Submarket

Financial District-Tower

The Financial District was the most active submarket,

Financial District-Low

with 3.2 MSF of leasing activity in 2014. The towers in

Back Bay-Low

the Financial District, buildings of 20 or more floors,

accounted for 70% of this activity. This contributed to
the decline in total vacancy in the towers to 12.4%.
Back Bay accumulated 1.7 MSF of leasing activity
throughout the year, although this activity was more
evenly split between towers and low rise buildings.
Seaport, which had over 1.1 MSF of activity in 2013,

Back Bay-Tower
Seaport District
Midtown
North Station
South Station
Government Center
0

remained active with over 600,000 SF of leasing.

Type

500,000 1,000,000 1,500,000 2,000,000 2,500,000

Renewal/ Sublease
5%
Expansion
4%

At year-end, the most common lease type remained

direct leases, with 60% of all annual leasing activity.
This is down from 75% during 2013, representing the
largest decline of all lease types. The biggest increase
was recorded in lease expansions, accounting for 8%
of all 2014 deals, up from 1% in 2013. Leasing of

Direct Lease
60%

Lease Renewal
22%

sublease space totaled 5% of the annual leasing

activity, up from 2% last year. At of the end of the
year, 700,000 square feet of sublease space remained
available in the CBD, dramatically down from its most
recent high in 2011 of more than 1 MSF.

Industry
Professional services, scientific and technical services
are the most active sectors in 2014 with over 2 MSF of
leasing activity. They captured 34% of leases at the
close of 2014, an uptick of 3% from the previous year.
The finance and insurance sectors experienced a
large year-over-year gain, up 9% with 1 MSF of
leasing activity. It captured 16% of this annual leasing
with notable deals by Liberty Mutual and Goldman
Sachs. The information sector posted the largest yearover-year gain, increasing by 10%.

Source: Newmark Grubb Knight Frank

Lease Extension
1%
Lease
Expansion
8%

Prof, Scientific & Technical Services

Finance and Insurance
Information
Retail Trade
Educational Services
Admin & Support
Manufacturing
Health Care & Social Assistance
Public Administration
Real Estate and Rental and Leasing
Unclassified
All Others Industries
Transportation and Warehousing
Other Services (except Public Admin)
Arts, Entertainment, and Recreation
Mgmt of Companies & Enterprises
0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Boston CBD
Statistical Averages

www.ngkf.com

Effective Rate

$60

Average effective rents continue to trend upward

$50

across all asset classes and submarkets within the

$49.86
$43.24

$40

CBD. Class A product experienced the sharpest

incline, increasing 26.9% since 2011. Class A Back
Bay towers demanded the highest rates, averaging in
the mid-to-high-$50s. Class B product have also
increased, up 17.9%. Effective rents in the Financial

$36.88
$30
$20
$10

District low rise properties increased 20.1% during this

$0

time, while Back Bay low rise properties averaged the

2Q11

4Q11

highest rates, now in the mid-$40s.

2Q12

4Q12

Overall

2Q13

Class A

4Q13

2Q14

4Q14

2Q14

4Q14

Class B

Free Rent in Months

Free rent remains active and available to renewing
and prospective tenants, but we have seen slight
decreases through the year. The overall average is 3
free months, down from 4 free months during 2013.

5
4
3

Several variables can impact this rate, such as deal

size and length of lease. Deals between 25,000-

100,000 SF averaged between 4-6 months of free rent

while deals over 100,000 SF averaged 8-10 months.
Five year leases averaged 2 additional months when

1
0

compared to leases of four years or less. Leases over

2Q11

4Q11

2Q12

6 years averaged at least 5 months of free rent.

Tenant Improvement in Dollars

T.I dollars remain very widespread, with some
landlords offering substantial dollars while others

4Q12
Class A

2Q13

4Q13

Class B

$60
$51.72
$50
$40

$37.48

continue to hold back. On average, Class A properties

offered over $50/sf, while Class B properties T.I.

$30

dollars remain lower, averaging in the low-to-mid

$20

$21.63

$20s. Longer term leases also commanded more T.I.

dollars than the average. Leases of six or more years
of Class A product saw T.I. dollars in the high $50s to
low $60s, while Class B product for leases of six or
more years averaged mid-to-high $40s.

$10
$0
2Q11

4Q11

2Q12
Overall

4Q12

2Q13

Class A

4Q13

2Q14

4Q14

Class B

Source: Newmark Grubb Knight Frank

Boston
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Boston, MA 02210

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medward@ngkf.com
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Newmark Grubb Knight Frank has implemented a proprietary database and our tracking methodology has
been revised. With this expansion and refinement in our data, there may be adjustments in historical
statistics including availability, asking rents, absorption and effective rents.
Newmark Grubb Knight Frank Research Reports are also available at www.ngkf.com/research
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