Summer is here and we are seeing an active commercial real estate market.
There is a widely accepted assumption that inflation pressure and higher interest rates have slowed the commercial market. While we may see this down the road, right now cash and demand are keeping the price of commercial real estate competitively high in the Merrimack Valley. Properties for sale are finding buyers. In fact, prospective buyers contacting Bell Tower CRE Group looking to purchase buildings remain at a much higher rate than sellers exploring placing their properties on the market.
JLL, a national broker and property manager, paints a less rosy picture of leasing prospects in the City of Boston in its quarterly report. JLL reports a slight dip in leasing prices to $40 per SF, with negative absorption as to lease space. Their update states:
“As we move through the rest of 2023, many key indicators are expected to trend down slightly. Asking rents have yet to feel the full effect of softer demand, as most downward pressure has manifested itself in rising concessions. On the other end of the spectrum, anchor tenants are starting to come back to the marketplace. Big requirements are unsurprisingly focused on new construction and trophy assets… for their corporate headquarters. Demand of this ilk provides much-needed excitement and energy to the office market as uncertain economic times persist.”
Lawrence Yun, Chief Economist at the National Association of Realtors saw a similar country wide outlook due to higher interest rates, while emphasizing that strong local economies may avoid the worst of an economic slowdown, his report was summarized as follows:
“The lack of capital, higher costs of financing and refinancing, and the weakening economy will contribute to a lower overall valuation of commercial real estate prices. Weaker prices will mean opportunities for those with deeper pockets to get deals done in the months and years ahead.”
The View from the Bell Tower
It is hard to tell when these impacts will be felt locally. At this time, Bell Tower CRE Group has been bucking national trends with both sales and leasing activity. We recently closed on the sale of a former Archdiocese of Boston Elementary School in Lowell. And leasing, which fell significantly during the pandemic due to work at home trends, is now on much steadier footing.
Vladimir Saldana, Agent, just completed leases of multiple office suites at 130 Parker Street in Lawrence, a rehabilitated school owned by Realtor Michelle Fermin.
“We think that there is strength today in the smaller office market,” observes Saldana. “The concerns created by the pandemic seem to have been reduced by some very practical factors. People need places to work and to do business. If you can provide a friendly business environment and reasonable costs, people are ready to sign leases – even long-term leases.”
Successful leases at properties brokered by Bell Tower CRE include 7 Technology Drive in Chelmsford, 63 Park Street in Andover, 630 Turnpike Street in North Andover, and 130 Parker Street in Lawrence. These leases have all occurred in the past 30-60 days representing strong leasing activity for the Merrimack Valley.
We welcome the opportunity to assist you with your commercial real estate needs.