Residential Market May be Soft, but Commercial Firms Up
We normally don’t pay much attention to the commercial side of real estate here at Mondoboston.com. Instead, we’re fascinated with lofts, brownstones, and life in central Boston. But a recent report on the office space market by the brokerage firm Jones Lang La Salle seems worth noting, as it may potentially have repercussions for the downtown housing market. Here’s what they have to say:
“While the U.S. economy may have already entered into recession, the same cannot be said for Boston. The city is fairing far better than other metro areas and thus far in 2008 remains active. The healthy market fundamentals established in 2007 are mostly unchanged, as positive absorption offsets the arrival of new sublease space. In the second quarter, Boston experienced 166,740 square feet of positive net absorption which helped counteract a negative first quarter, bringing the year-to-date total to a positive 20,942 square feet. The South Boston Waterfront and the Financial District saw the largest transactions of the quarter.”
Lately, there have been news reports on several other trends in downtown Boston. First, downtown condo sales have been falling because there are not enough large condo projects coming online to meet demand. Second, Boston housing prices have increased, even as the rest of the country experiences sharp declines. According to the S&P/Case-Shiller home price index, home prices increased 1 percent in May from the previous month, following a 0.1 percent gain in April. These were Boston’s first monthly price increases since July 2007.
Could a brisk commercial market, a limited condo supply and steady or rising housing prices mean that the downtown market has weathered the housing slump unscathed? Stay tuned.
Read the full Jones Lang La Salle report here.
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