The Boston commercial real estate market remains active and one of the key drivers is clearly the continued growth of tech companies in the region.
Verizon’s highly publicized deal near North Station is one example. However, innovative technology companies have long played a major role the fabric of Greater Boston, with major universities such as MIT and Harvard constantly giving life to new startup companies, which have found a ready supply of talented workers.
“Innovation has been ingrained in Boston’s culture for centuries – from Bell Telephone to Ken Olsen to Amazon,” says Ashley Lane, Vice President of Research at Cushman & Wakefield in Boston. “Twenty years ago, tech was clustered in the suburbs along Route 128 – it was, after all, called America’s Technology Highway. The reality is that as long there’s MIT, there will be innovation in greater Boston.”
The concentration of technology companies in the Greater Boston market is among the highest in the country.
From mid-2017 to mid-2018, Technology companies account for 15 percent of all leasing activity in Boston, and 34 percent of leasing in Cambridge. Much of that activity is from companies migrating in from out-of-market. Lane adds that at last count, more than 5 million square feet (MSF) in the last 5 years has been leased by tech companies migrating into the city.
The strength of the industry has translated into continual increases in office demand. Since 2010, Class A Office rents in Downtown Boston have risen 39.5 percent (compared with 25 percent growth nationally), with sale prices on office assets also outpacing the national average.
Overall, technology companies account for 10 percent of total jobs in the market, which speaks to the larger national trends around the industry.
“Tech is no longer limited to just traditional technology companies – media companies, retailers and even law firms are competing for the same spaces and talent as traditional tech companies,” says Revathi Greenwood, Cushman & Wakefield’s Americas Head of Research.
Since 2011, tech companies in the region have received $9.8 Billion in venture capital funding, driving the development of technology firms across the greater Boston area.
“Talent is everything for innovative companies,” says Ryan Romano, a Managing Director at Cushman & Wakefield. “Companies and investors – both in the Boston market and those in other cities – have identified Boston as a market where they can find the right people to take their companies to the next level. It is no secret that many of the brightest minds in the world come to Boston to attend the likes of Harvard, MIT & Babson, so the talent pool is deep.”
Regardless of which company is making headlines in any particular news cycle – between biotech, driverless cars, or other domains – tech companies will continue to be a significant contributor to the Boston commercial real estate market. And that’s what continues to make things so exciting.
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About Timothy Griffin
As Senior Marketing Coordinator for Cushman & Wakefield in Boston, Timothy Griffin creates a wide variety of internal and external communications pieces, such as presentations, proposals, and blog articles, covering commercial real estate trends as well as technology, finance, and other issues which impact the market.