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2019 New England Market Outlook

A MESSAGE FROM CBRE...

The New England real estate markets have been on a decade-long run of growth and superior performance. It is difficult to recall the anxiety-filled days of 2009 when we bottomed out from the Great Recession and believed only modest growth was possible for decades to come. Our current compounding annual growth will not last forever and market corrections are necessary and unavoidable, but we are bullish on the prospects for the local real estate markets in 2019.

The Massachusetts economy continues to grow and prosper. We are fortunate to find ourselves in a position of strength, due in large measure to the partnership that has been built between the business community and the local and state governments. This partnership in the City of Boston is especially effective as our skyline continuously changes as new projects deliver office, laboratory, residential, retail and hotel space to satisfy pent-up occupier demand. New England, and Greater Boston in particular, continues to be a talent hub, and this talent is attracting a growing number of the world's most innovative companies to our area. We must capitalize on this momentum by bringing new corporate citizens to our region—and by accommodating the existing enterprises that call New England home, so they can grow and prosper. To succeed in this endeavor, it will be important for the business and political leadership in Boston and New England to leverage their successful partnerships and solve for the most critical issues facing our area: housing shortages and aging infrastructures. Our roads, public transportation systems and utility systems are all aging and can barely support existing demographics. We are playing catch up on these deferred investments and must act now if we expect to continue to host world-class companies in our region.

In times of unusual uncertainty, agility is a vital asset. We believe the local real estate markets will continue to perform well in 2018 and adapt to potential challenges. Investors in office and multifamily properties may prepare for an eventual downturn by improving capital structures with more agile debt and equity capital stacks. Meanwhile, the golden era of industrial real estate is expanding to include smaller, last-mile facilities near high-density urban centers as e-commerce grows in influence. The future of this sector may not be industrial as we know it, but a hybrid of retail and industrial. Technology has expanded retail opportunities beyond physical storefronts, but creating a dynamic in-store experience can recapture customers and reinforce a company's brand. Large occupiers of real estate need to think about agility in both individual market and portfolio terms, including lease lengths, expansion and contraction options, and availability of talent. The current labor shortage in the United States is projected to get worse, so we anticipate occupiers will accelerate their real estate investment this year in those submarkets where they hope to attract and retain talent for their businesses. New England—and Greater Boston in particular—should be a beneficiary of this strategy.

We are once again proud to report that the employees and tenants in CBRE-managed properties have continued to set new standards for giving back to our communities and helping so many of our neighbors who find themselves in need of assistance. Our philanthropic initiative, CBRE Cares New England, was launched in 2010 with a mission of coordinating volunteer and giving opportunities that have a significant effect on the lives of families in need throughout New England. Since its inception, CBRE Cares New England has collected over $1.4 million worth of donations for local designated beneficiary organizations. This past year, these groups included Heading Home, Rosie's Place, Cradles to Crayons, The Juvenile Diabetes Research Foundation, Home Base Program, RIZE Massachusetts, The Greater Boston Food Bank, and Goodwill chapters in Massachusetts, Connecticut and Rhode Island.

As we mentioned last year, in times of unusual uncertainty, agility is an asset. The commercial real estate industry has become agile and innovative and will continue to evolve and adapt as the broader workplace evolves and adapts. As the global leader of the commercial real estate industry, CBRE will continue to lead and pioneer change for the benefit of our clients, employees and stakeholders. We look forward to reporting our observations of this coming year to you again in 12 months' time.

New England Market Outlook

Contacts

$name
Jodie Poirier
Managing Director
Lic. 01884735
+1 617 936 2294
Andy Hoar
Andrew Hoar
President/Co-Managing Partner
+1 617 912 7010
+1 617 912 7001
Kevin Doyle
Kevin Doyle
CFO/Co-Managing Partner
+1 617 912 7070
+1 617 912 7001