OFFICE MARKET REPORT Office Market Report Boston The Stevens Group First Quarter 2017 The Stevens Group Ten Post Office Square Boston MA 02109 617-886-9300 Our Difference Is Your Advantage
First Quarter 2017 Boston Table of Contents Table of Contents................................................................. A Methodology...................................................................... B Terms & Definitions................................................................ C Market Highlights & Overview........................................................ 1 CoStar Markets & Submarkets........................................................ 4 Inventory & Development Analysis..................................................... 5 Inventory & Development Analysis Select Top Deliveries Select Top Under Construction Properties Figures at a Glance................................................................. 9 Figures at a Glance by Class & Market Figures at a Glance by Class & Submarket Figures at a Glance Grouped by CBD vs Suburban Historical Figures at a Glance Leasing Activity Analysis............................................................ 17 Select Top Lease Transactions Sales Activity Analysis.............................................................. 19 Sales Activity Analysis Select Top Sales Transactions Analysis of Individual CoStar Submarket Clusters........................................ 21 Boston/Suffolk County Market Cambridge Market Close-In Suburbs North Market Route 128 North Market Route 128 South Market Route 128 West Market Route 3 North Market Route 495 North East Market Route 495 South Market Route 495/Mass Pike West Market Route 495/Route 2 West Market Southern New Hampshire Market Worcester Market 2017 CoStar Group, Inc. CoStar Office Statistics A
Boston First Quarter 2017 Methodology The CoStar Office Statistics, unless specifically stated otherwise, calculates office statistics using CoStar Group s entire database of existing and under construction office buildings in each metropolitan area. Included are office, office condominium, office loft, office medical, all classes and all sizes, and both multi-tenant and single-tenant buildings, including owner-occupied buildings. CoStar Group's global database includes approximately 95.6 billion square feet of coverage in 4.4 million properties. All rental rates reported in the CoStar Office Report have been converted to a Full Service equivalent rental rate. For information on subscribing to CoStar s other products and services, please contact us at 1-877-7COSTAR, or visit our web site at www.costar.com Copyright 2017 CoStar Group, Inc. All Rights Reserved. Although CoStar makes efforts to ensure the accuracy and reliability of the information contained herein, CoStar makes no guarantee, representation or warranty regarding the quality, accuracy, timeliness or completeness of the information. The publication is provided as is and CoStar expressly disclaims any guarantees, representations or warranties of any kind, including those of MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. CoStar Group, Inc. 1331 L ST NW Washington, DC 20005 (800) 204-5960 www.costar.com NASDAQ: CSGP B CoStar Office Statistics 2017 CoStar Group, Inc.
First Quarter 2017 Boston Terms & Definitions Availability Rate: The ratio of available space to total rentable space, calculated by dividing the total available square feet by the total rentable square feet. Available Space: The total amount of space that is currently being marketed as available for lease in a given time period. It includes any space that is available, regardless of whether the space is vacant, occupied, available for sublease, or available at a future date. Build-to-Suit: A term describing a particular property, developed specifically for a certain tenant to occupy, with structural features, systems, or improvement work designed specifically for the needs of that tenant. A build-to-suit can be leased or owned by the tenant. In a leased build-to-suit, a tenant will usually have a long term lease on the space. Buyer: The individual, group, company, or entity that has purchased a commercial real estate asset. Cap Rate: Short for capitalization rate. The Cap Rate is a calculation that reflects the relationship between one year s net operating income and the current market value of a particular property. The Cap Rate is calculated by dividing the annual net operating income by the sales price (or asking sales price). CBD: Abbreviation for Central Business District. (See also: Central Business District) Central Business District: The designations of Central Business District (CBD) and Suburban refer to a particular geographic area within a metropolitan statistical area (MSA) describing the level of real estate development found there. The CBD is characterized by a high density, well organized core within the largest city of a given MSA. Class A: A classification used to describe buildings that generally qualify as extremely desirable investment-grade properties and command the highest rents or sale prices compared to other buildings in the same market. Such buildings are well located and provide efficient tenant layouts as well as high quality, and in some buildings, one-ofa-kind floor plans. They can be an architectural or historical landmark designed by prominent architects. These buildings contain a modern mechanical system, and have above-average maintenance and management as well as the best quality materials and workmanship in their trim and interior fittings. They are generally the most attractive and eagerly sought by investors willing to pay a premium for quality. Class B: A classification used to describe buildings that generally qualify as a more speculative investment, and as such, command lower rents or sale prices compared to Class A properties. Such buildings offer utilitarian space without special attractions, and have ordinary design, if new or fairly new; good to excellent design if an older non-landmark building. These buildings typically have average to good maintenance, management and tenants. They are less appealing to tenants than Class A properties, and may be deficient in a number of respects including floor plans, condition and facilities. They lack prestige and must depend chiefly on a lower price to attract tenants and investors. Class C: A classification used to describe buildings that generally qualify as no-frills, older buildings that offer basic space and command lower rents or sale prices compared to other buildings in the same market. Such buildings typically have below-average maintenance and management, and could have mixed or low tenant prestige, inferior elevators, and/or mechanical/electrical systems. These buildings lack prestige and must depend chiefly on a lower price to attract tenants and investors. Construction Starts: Buildings that began construction during a specific period of time. (See also: Deliveries) Contiguous Blocks of Space: Space within a building that is, or is able to be joined together into a single contiguous space. Deliveries: Buildings that complete construction during a specified period of time. In order for space to be considered delivered, a certificate of occupancy must have been issued for the property. Delivery Date: The date a building completes construction and receives a certificate of occupancy. Developer: The company, entity or individual that transforms raw land to improved property by use of labor, capital and entrepreneurial efforts. Direct Space: Space that is being offered for lease directly from the landlord or owner of a building, as opposed to space being offered in a building by another tenant (or broker of a tenant) trying to sublet a space that has already been leased. : The square footage of buildings that have received a certificate of occupancy and are able to be occupied by tenants. It does not include space in buildings that are either planned, under construction or under renovation. Flex Building: A type of building designed to be versatile, which may be used in combination with office (corporate headquarters), research and development, quasi-retail sales, and including but not limited to industrial, warehouse, and distribution uses. A typical flex building will be one or two stories with at least half of the rentable area being used as office space, have ceiling heights of 16 feet or less, and have some type of drive-in door, even though the door may be glassed in or sealed off. Full Service Rental Rate: Rental rates that include all operating expenses such as utilities, electricity, janitorial services, taxes and insurance. Gross Absorption: The total change in occupied space over a given period of time, counting space that is occupied but not space that is vacated by tenants. Gross absorption differs from leasing Activity, which is the sum of all space leased over a certain period of time. Unless otherwise noted Gross Absorption includes direct and sublease space. Growth in Inventory: The change in size of the existing square footage in a given area over a given period of time, generally due to the construction of new buildings. Industrial Building: A type of building adapted for such uses as the assemblage, processing, and/or manufacturing of products from raw materials or fabricated parts. Additional uses include warehousing, distribution, and maintenance facilities. The primary purpose of the space is for storing, producing, assembling, or distributing product. Landlord Rep: (Landlord Representative) In a typical lease transaction between an owner/landlord and tenant, the broker that represents the interests of the owner/landlord is referred to as the Landlord Rep. Leased Space: All the space that has a financial lease obligation. It includes all leased space, regardless of whether the space is currently occupied by a tenant. Leased space also includes space being offered for sublease. Leasing Activity: The volume of square footage that is committed to and signed under a lease obligation for a specific building or market in a given period of time. It includes direct leases, subleases and renewals of existing leases. It also includes any pre-leasing activity in planned, under construction, or under renovation buildings. Market: Geographic boundaries that serve to delineate core areas that are competitive with each other and constitute a generally accepted primary competitive set of areas. Markets are building-type specific, and are non-overlapping contiguous geographic designations having a cumulative sum that matches the boundaries of the entire Region (See also: Region). Markets can be further subdivided into Submarkets. (See also: Submarkets) Multi-Tenant: Buildings that house more than one tenant at a given time. Usually, multi-tenant buildings were designed and built to accommodate many different floor plans and designs for different 2017 CoStar Group, Inc. CoStar Office Statistics C
Boston First Quarter 2017 tenant needs. (See also: Tenancy). Net Absorption: The net change in occupied space over a given period of time. Unless otherwise noted Net Absorption includes direct and sublease space. Net Rental Rate: A rental rate that excludes certain expenses that a tenant could incur in occupying office space. Such expenses are expected to be paid directly by the tenant and may include janitorial costs, electricity, utilities, taxes, insurance and other related costs. New Space: Sometimes called first generation space, refers to space that has never been occupied and/or leased by a tenant. Occupied Space: Space that is physically occupied by a tenant. It does not include leased space that is not currently occupied by a tenant. Office Building: A type of commercial building used exclusively or primarily for office use (business), as opposed to manufacturing, warehousing, or other uses. Office buildings may sometimes have other associated uses within part of the building, i.e., retail sales, financial, or restaurant, usually on the ground floor. Owner: The company, entity, or individual that holds title on a given building or property. Planned/Proposed: The status of a building that has been announced for future development but not yet started construction. Preleased Space: The amount of space in a building that has been leased prior to its construction completion date, or certificate of occupancy date. Price/SF: Calculated by dividing the price of a building (either sales price or asking sales price) by the Rentable Building Area (RBA). Property Manager: The company and/or person responsible for the day-to-day operations of a building, such as cleaning, trash removal, etc. The property manager also makes sure that the various systems within the building, such as the elevators, HVAC, and electrical systems, are functioning properly. Quoted Rental Rate: The asking rate per square foot for a particular building or unit of space by a broker or property owner. Quoted rental rates may differ from the actual rates paid by tenants following the negotiation of all terms and conditions in a specific lease. RBA: Abbreviation for Rentable Building Area. (See also: Rentable Building Area) Region: Core areas containing a large population nucleus, that together with adjacent communities have a high degree of economic and social integration. Regions are further divided into market areas, called Markets. (See also: Markets) Relet Space: Sometimes called second generation or direct space, refers to existing space that has previously been occupied by another tenant. Rentable Building Area: (RBA) The total square footage of a building that can be occupied by, or assigned to a tenant for the purpose of determining a tenant s rental obligation. Generally RBA includes a percentage of common areas including all hallways, main lobbies, bathrooms, and telephone closets. Rental Rates: The annual costs of occupancy for a particular space quoted on a per square foot basis. Sales Price: The total dollar amount paid for a particular property at a particular point in time. Sales Volume: The sum of sales prices for a given group of buildings in a given time period. Seller: The individual, group, company, or entity that sells a particular commercial real estate asset. SF: Abbreviation for Square Feet. Single-Tenant: Buildings that are occupied, or intended to be occupied by a single tenant. (See also: Build-to-suit and Tenancy) Sublease Space: Space that has been leased by a tenant and is being offered for lease back to the market by the tenant with the lease obligation. Sublease space is sometimes referred to as sublet space. Submarkets: Specific geographic boundaries that serve to delineate a core group of buildings that are competitive with each other and constitute a generally accepted primary competitive set, or peer group. Submarkets are building type specific (office, industrial, retail, etc.), with distinct boundaries dependent on different factors relevant to each building type. Submarkets are non-overlapping, contiguous geographic designations having a cumulative sum that matches the boundaries of the Market they are located within (See also: Market). Suburban: The Suburban and Central Business District (CBD) designations refer to a particular geographic area within a metropolitan statistical area (MSA). Suburban is defined as including all office inventory not located in the CBD. (See also: CBD) Tenancy: A term used to indicate whether or not a building is occupied by multiple tenants (See also: Multi-tenant) or a single tenant. (See also: Single-tenant) Tenant Rep: Tenant Rep stands for Tenant Representative. In a typical lease transaction between an owner/landlord and tenant, the broker that represents the interests of the tenant is referred to as a Tenant Rep. Time On Market: A measure of how long a currently available space has been marketed for lease, regardless of whether it is vacant or occupied. Under Construction: Buildings in a state of construction, up until they receive their certificate of occupancy. In order for CoStar to consider a building under construction, the site must have a concrete foundation in place. Abbreviated UC. Rate: A measurement expressed as a percentage of the total amount of physically vacant space divided by the total amount of existing inventory. Under construction space generally is not included in vacancy calculations. Vacant Space: Space that is not currently occupied by a tenant, regardless of any lease obligation that may be on the space. Vacant space could be space that is either available or not available. For example, sublease space that is currently being paid for by a tenant but not occupied by that tenant, would be considered vacant space. Likewise, space that has been leased but not yet occupied because of finish work being done, would also be considered vacant space. Weighted Average Rental Rate: Rental rates that are calculated by factoring in, or weighting, the square footage associated with each particular rental rate. This has the effect of causing rental rates on larger spaces to affect the average more than that of smaller spaces. The weighted average rental rate is calculated by taking the ratio of the square footage associated with the rental rate on each individual available space to the square footage associated with rental rates on all available spaces, multiplying the rental rate by that ratio, and then adding together all the resulting numbers. Unless specifically specified otherwise, rental rate averages include both Direct and Sublet available spaces. Year Built: The year in which a building completed construction and was issued a certificate of occupancy. YTD: Abbreviation for Year-to-Date. Describes statistics that are cumulative from the beginning of a calendar year through whatever time period is being studied. D CoStar Office Statistics 2017 CoStar Group, Inc.
Overview First Quarter 2017 Boston Boston s Decreases to 8.0% Net Absorption Positive 1,114,738 SF in the Quarter The Boston Office market ended the first quarter 2017 with a vacancy rate of 8.0%. The vacancy rate was down over the previous quarter, with net absorption totaling positive 1,114,738 square feet in the first quarter. Vacant sublease space decreased in the quarter, ending the quarter at 2,440,670 square feet. Rental rates ended the first quarter at $21.45, an increase over the previous quarter. A total of six buildings delivered to the market in the quarter totaling 1,175,027 square feet, with 4,155,500 square feet still under construction at the end of the quarter. Absorption Net absorption for the overall Boston office market was positive 1,114,738 square feet in the first quarter 2017. That compares to positive 443,908 square feet in the fourth quarter 2016, positive 2,562,105 square feet in the third quarter 2016, and positive 578,577 square feet in the second quarter 2016. The Class-A office market recorded net absorption of positive 474,861 square feet in the first quarter 2017, compared to positive 758,859 square feet in the fourth quarter 2016, positive 1,528,998 in the third quarter 2016, and negative (194,560) in the second quarter 2016. The Class-B office market recorded net absorption of positive 630,319 square feet in the first quarter 2017, compared to negative (230,976) square feet in the fourth quarter 2016, positive 661,711 in the third quarter 2016, and positive 332,897 in the second quarter 2016. The Class-C office market recorded net absorption of positive 9,558 square feet in the first quarter 2017 compared to negative (83,975) square feet in the fourth quarter 2016, positive 371,396 in the third quarter 2016, and positive 440,240 in the second quarter 2016. Net absorption for Boston s central business district was negative (417,454) square feet in the first quarter 2017. That compares to positive 39,998 square feet in the fourth quarter 2016, positive 823,445 in the third quarter 2016, and negative (170,432) in the second quarter 2016. Net absorption for the suburban markets was positive 1,532,192 square feet in the first quarter 2017. That compares to positive 403,910 square feet in fourth quarter 2016, positive 1,738,660 in the third quarter 2016, and positive 749,009 in the second quarter 2016. The office vacancy rate in the Boston market area decreased to 8.0% at the end of the first quarter 2017. The vacancy rate was 8.1% at the end of the fourth quarter 2016, 8.2% at the end of the third quarter 2016, and 8.5% at the end of the second quarter 2016. Class-A projects reported a vacancy rate of 9.7% at the end of the first quarter 2017, 9.4% at the end of the fourth quarter 2016, 9.9% at the end of the third quarter 2016, and 9.9% at the end of the second quarter 2016. Class-B projects reported a vacancy rate of 8.6% at the end of the first quarter 2017, 9.1% at the end of the fourth quarter 2016, 8.9% at the end of the third quarter 2016, and 9.3% at the end of the second quarter 2016. Class-C projects reported a vacancy rate of 3.9% at the Rates by Class 1998-2017 A B C Total Market 20% 18% 16% 14% Rate 12% 10% 8% 6% 4% 2% 0% 1998 1q1999 1q2000 1q2001 1q2002 1q2003 1q2004 1q2005 1q2006 1q2007 1q2008 1q2009 1q2010 1q2011 1q2012 1q2013 1q2014 1q2015 1q2016 1q 20171 2017 CoStar Group, Inc. CoStar Office Statistics 1
Boston First Quarter 2017 Overview end of the first quarter 2017, 4.0% at the end of fourth quarter 2016, 3.9% at the end of the third quarter 2016, and 4.3% at the end of the second quarter 2016. The overall vacancy rate in Boston s central business district at the end of the first quarter 2017 increased to 7.9%. The vacancy rate was 7.4% at the end of the fourth quarter 2016, 7.5% at the end of the third quarter 2016, and 8.0% at the end of the second quarter 2016. The vacancy rate in the suburban markets decreased to 8.0% in the first quarter 2017. The vacancy rate was 8.3% at the end of the fourth quarter 2016, 8.4% at the end of the third quarter 2016, and 8.6% at the end of the second quarter 2016. Sublease The amount of vacant sublease space in the Boston market decreased to 2,440,670 square feet by the end of the first quarter 2017, from 2,529,547 square feet at the end of the fourth quarter 2016. There was 2,401,885 square feet vacant at the end of the third quarter 2016 and 2,369,945 square feet at the end of the second quarter 2016. Boston s Class-A projects reported vacant sublease space of 1,672,978 square feet at the end of first quarter 2017, up from the 1,579,925 square feet reported at the end of the fourth quarter 2016. There were 1,611,607 square feet of sublease space vacant at the end of the third quarter 2016, and 1,546,778 square feet at the end of the second quarter 2016. Class-B projects reported vacant sublease space of 711,213 square feet at the end of the first quarter 2017, down from the 892,216 square feet reported at the end of the fourth quarter 2016. At the end of the third quarter 2016 there were 729,303 square feet, and at the end of the second quarter 2016 there were 772,154 square feet vacant. Class-C projects reported decreased vacant sublease space from the fourth quarter 2016 to the first quarter 2017. U.S. Comparison Past 7 Quarters Rate 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Boston United States 2015 3q Sublease vacancy went from 57,406 square feet to 56,479 square feet during that time. There was 60,975 square feet at the end of the third quarter 2016, and 51,013 square feet at the end of the second quarter 2016. Sublease vacancy in Boston s central business district stood at 529,987 square feet at the end of the first quarter 2017. It was 459,956 square feet at the end of the fourth quarter 2016, 557,036 square feet at the end of the third quarter 2016, and 509,375 square feet at the end of the second quarter 2016. Sublease vacancy in the suburban markets ended the first quarter 2017 at 1,910,683 square feet. At the end of the fourth quarter 2016 sublease vacancy was 2,069,591 square feet, was 1,844,849 square feet at the end of the third quarter 2016, and was 1,860,570 square feet at the end of the second quarter 2016. Rental Rates The average quoted asking rental rate for available office space, all classes, was $21.45 per square foot per year at the end of the first quarter 2017 in the Boston market area. This represented a 1.9% increase in quoted rental rates from the end of the fourth quarter 2016, when rents were reported at $21.04 per square foot. The average quoted rate within the Class-A sector was $26.45 at the end of the first quarter 2017, while Class-B rates stood at $20.55, and Class-C rates at $17.83. At the end of the fourth quarter 2016, Class-A rates were $25.77 per square foot, Class-B rates were $20.22, and Class-C rates were $17.83. The average quoted asking rental rate in Boston s CBD was $46.02 at the end of the first quarter 2017, and $20.70 in the suburban markets. In the fourth quarter 2016, quoted rates were $47.64 in the CBD and $20.27 in the suburbs. Deliveries and Construction During the first quarter 2017, six buildings totaling 1,175,027 square feet were completed in the Boston market area. This compares to three buildings totaling 87,623 square feet that were completed in the fourth quarter 2016, nine buildings totaling 1,704,901 square feet completed in the third quarter 2016, and 90,517 square feet in three buildings completed in the second quarter 2016. There were 4,155,500 square feet of office space under construction at the end of the first quarter 2017. Some of the notable 2017 deliveries include: Partners HealthCare, an 850,000-square-foot facility that delivered in first quarter 2017 and is now 100% occupied, and 80 Guest St, a 265,000-square-foot building that delivered in first quarter 2017. The largest projects underway at the end of first quarter 2017 were Alexandria Center at Kendall Square, a 505,000- square-foot building, and Alexandria Center at Kendall Square, a 431,500-square-foot facility. 2 CoStar Office Statistics 2017 CoStar Group, Inc.
Overview First Quarter 2017 Boston Inventory Total office inventory in the Boston market area amounted to 399,281,833 square feet in 13,744 buildings as of the end of the first quarter 2017. The Class-A office sector consisted of 151,740,738 square feet in 775 projects. There were 4,564 Class- B buildings totaling 161,940,649 square feet, and the Class-C sector consisted of 85,600,446 square feet in 8,405 buildings. Within the Office market there were 510 owner-occupied buildings accounting for 29,161,895 square feet of office space. Sales Activity Tallying office building sales of 15,000 square feet or larger, Boston office sales figures fell during the fourth quarter 2016 in terms of dollar volume compared to the third quarter of 2016. In the fourth quarter, 40 office transactions closed with a total volume of $747,969,549. The 40 buildings totaled 4,033,789 square feet and the average price per square foot equated to $185.43 per square foot. That compares to 42 transactions totaling $1,161,212,453 in the third quarter 2016. The total square footage in the third quarter was 3,340,919 square feet for an average price per square foot of $347.57. Total office building sales activity in 2016 was down compared to 2015. In the twelve months of 2016, the market saw 170 office sales transactions with a total volume of $4,356,802,935. The price per square foot averaged $289.10. In the same twelve months of 2015, the market posted 144 transactions with a total volume of $7,037,761,342. The price per square foot averaged $364.11. Cap rates have been higher in 2016, averaging 6.57% compared to the same period in 2015 when they averaged 5.97%. One of the largest transactions that has occurred within the last four quarters in the Boston market is the sale of 101 Seaport Blvd. in Boston. This 439,058-square-foot office building sold for $452,000,000, or $1,029.48 per square foot. The property sold on 4/11/2016. Absorption & Deliveries Past 7 Quarters Net Absorption Deliveries 3.0 2.56 2.5 2.11 2.0 1.70 1.5 1.16 1.21 1.15 1.11 1.18 1.0 0.87 0.61 0.58 0.44 0.5 0.09 0.09 0.0 2015 3q Report compiled by: William Trentzsch, CoStar Research Manager 2017 CoStar Group, Inc. CoStar Office Statistics 3
Boston First Quarter 2017 Markets CoStar Submarket Clusters & Submarkets In analyzing metropolitan areas, CoStar has developed geographic designations to help group properties together, called Markets, Submarket Clusters and Submarkets. Markets are the equivalent of metropolitan areas, or areas containing a large population nucleus, that together with adjacent communities have a high degree of economic and social integration. Markets are then divided into Submarket Clusters, which are core areas within a metropolitan area that are known to be competitive with each other in terms of attracting and keeping tenants. Markets are then further subdivided into smaller units called Submarkets, which serve to delineate a core group of buildings that are competitive with each other and constitute a generally accepted competitive set, or peer group. Submarket Clusters Submarkets Boston/Suffolk County Back Bay* Brighton/Allston/Fenway Charlestown/East Boston Financial District* Midtown* North End/Waterfront* North Station/Beacon Hill* Roxbury/Dorchester Seaport* South Boston South End South Suffolk County Cambridge E Cambridge/Kendall Sq Mid-Cambridge/Harvard Sq W Cambridge/Alewife Close-In Suburbs North Chelsea/Revere Medford/Malden Somerville/Everett Route 128 North Burlington/Woburn Danvers/Beverly Essex/Gloucester Lynnfield/Wakefield Peabody/Salem Saugus/Lynn Wilmington/Reading Route 128 South Quincy/Braintree Route 1 South Route 24 Route 3 Corridor Route 128 West Lexington/Arlington Newton/Brookline Waltham/Watertown Wellesley/Needham Route 3 North Groton/Townsend Lowell/Chelmsford Route 495 North East Amesbury/Ipswich Lawrence/Andover Route 495 South Attleboro/New Bedford I-95 Corridor South Route 3 South Route 495/Mass Pike West Framingham/Natick Hopkinton/Holliston The Boroughs Route 495/Route 2 West Concord/Maynard Fitchburg/Leominster Southern New Hampshire Hillsborough Rockingham Strafford County Worcester Outlying Worcester Worcester Metro * Submarkets comprising the CBD. For statistics reference the CBD vs Suburban Figures at a Glance Page. 4 CoStar Office Statistics 2017 CoStar Group, Inc.
Inventory & development First Quarter 2017 Boston Historical Deliveries 1982-2017 18.0 16.9 Deliveries Average Delivered SF 16.0 14.0 13.2 12.8 13.0 Millions of SF 12.0 10.0 8.0 6.0 4.0 2.0 7.0 6.9 11.0 9.8 6.9 2.0 1.5 1.4 0.6 0.9 1.5 3.4 10.6 7.4 6.3 5.7 3.7 2.2 2.1 3.7 2.9 2.1 4.2 2.9 2.0 1.7 1.3 3.4 2.7 4.2 3.0 3.6 0.0 1982 1986 1990 1994 1998 2002 2006 2010 2014 * Future deliveries based on current under construction buildings. Construction Activity Markets Ranked by Under Construction Square Footage Under Construction Inventory Average Bldg Size Market # Bldgs Total RBA Preleased SF Preleased % All Existing U/C Cambridge 3 1,160,168 715,858 61.7% 71,755 386,723 Boston/Suffolk County 5 1,155,320 211,250 18.3% 73,920 231,064 Route 128 West 6 1,137,145 162,650 14.3% 34,033 189,524 Route 128 North 3 442,000 280,000 63.3% 26,653 147,333 Route 495/Mass Pike West 2 59,400 0 0.0% 33,729 29,700 Close-In Suburbs North 1 55,117 0 0.0% 22,800 55,117 Southern New Hampshire 2 51,318 28,800 56.1% 14,945 25,659 Route 495 South 3 35,932 27,932 77.7% 11,786 11,977 Route 495 North East 1 30,000 30,000 100.0% 23,759 30,000 Route 128 South 1 26,100 0 0.0% 20,957 26,100 All Other 1 3,000 0 0.0% 23,454 3,000 Totals 28 4,155,500 1,456,490 35.0% 29,051 148,411 Recent Deliveries Leased & Un-Leased SF in Deliveries Since 2013 Future Deliveries Preleased & Un-Leased SF in Properties Scheduled to Deliver 4.5 Leased Un-Leased 1,200 Preleased Un-Leased 4.0 3.5 1,000 Millions of SF 3.0 2.5 2.0 1.5 Thousands of SF 800 600 400 T 1.0 0.5 200 0.0 2013 2015 2017 0 2017 2q 2017 4q 2017 CoStar Group, Inc. CoStar Office Statistics 5
Boston First Quarter 2017 Inventory & development Historical Construction Starts & Deliveries Square Footage Per Quarter Starting and Completing Construction 1.8 Construction Starts Deliveries 1.70 1.6 Millions of SF 1.4 1.2 1.0 0.8 0.6 0.4 1.17 1.33 0.58 0.37 0.75 0.77 0.67 0.30 1.39 0.80 1.28 1.21 0.46 0.87 0.39 1.21 1.15 0.71 1.16 0.59 1.18 0.2 0.0 0.08 0.09 0.09 0.02 2014 1q 2015 1q 2016 1q 2017 1q Recent Deliveries by Project Size Breakdown of Year-to-Date Development Based on RBA of Project Building Size # Bldgs RBA SF Leased % Leased Avg Rate Single-Tenant Multi-Tenant < 50,000 SF 4 60,027 57,527 95.8% $0.00 0 60,027 50,000 SF - 99,999 SF 0 0 0 0.0% $0.00 0 0 100,000 SF - 249,999 SF 0 0 0 0.0% $0.00 0 0 250,000 SF - 499,999 SF 1 265,000 53,000 20.0% $0.00 0 265,000 >= 500,000 SF 1 850,000 850,000 100.0% $0.00 850,000 0 Recent Development by Tenancy Comparison Based on RBA Developed for Single & Multi Tenant Use Based on Total RBA 2017 Deliveries Currently Under Construction By Class By Space Type 5% 21% 16% 72% 28% 41% 38% 95% 84% Multi Single Multi Single Class A Class B Class C Multi Single 6 CoStar Office Statistics 2017 CoStar Group, Inc.
Inventory & development First Quarter 2017 Boston 2017 CoStar Group, Inc. CoStar Office Statistics 7
Boston First Quarter 2017 Inventory & development 8 CoStar Office Statistics 2017 CoStar Group, Inc.
Figures at a Glance First Quarter 2017 Boston Class A Market Statistics First Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Boston/Suffolk County 157 58,000,710 4,555,391 4,979,491 8.6% (74,567) 265,000 1,146,320 $59.42 Cambridge 98 19,100,850 213,891 573,743 3.0% 15,901 0 1,160,168 $52.84 Close-In Suburbs North 17 3,880,914 163,228 244,970 6.3% 798,604 850,000 55,117 $29.03 Route 128 North 87 13,082,167 1,514,635 1,666,232 12.7% (243,559) 0 425,000 $26.24 Route 128 South 71 10,182,421 910,168 958,561 9.4% (37,680) 0 0 $23.71 Route 128 West 114 16,724,471 1,682,228 2,096,265 12.5% 20,586 0 1,130,105 $36.89 Route 3 North 29 4,921,841 453,435 602,032 12.2% (81,397) 0 0 $20.11 Route 495 North East 26 3,448,350 961,683 961,683 27.9% 26,890 0 0 $19.76 Route 495 South 19 1,804,277 164,150 164,150 9.1% (19,479) 0 0 $26.64 Route 495/Mass Pike West 82 10,922,552 1,379,477 1,419,793 13.0% (69,293) 0 45,000 $21.24 Route 495/Route 2 West 16 3,020,671 362,523 362,523 12.0% 8,928 0 0 $20.65 Southern New Hampshire 44 4,744,803 457,962 457,962 9.7% 90,348 0 28,800 $22.30 Worcester 15 1,906,711 233,932 238,276 12.5% 39,579 0 0 $23.15 Totals 775 151,740,738 13,052,703 14,725,681 9.7% 474,861 1,115,000 3,990,510 $26.45 Class B Market Statistics First Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Boston/Suffolk County 651 40,154,677 2,457,014 2,590,301 6.5% 36,878 6,000 9,000 $35.02 Cambridge 160 9,552,024 69,285 144,266 1.5% 162,003 0 0 $35.81 Close-In Suburbs North 118 3,310,632 298,354 301,498 9.1% (6,299) 0 0 $24.34 Route 128 North 354 12,083,541 900,042 1,032,951 8.5% 71,974 0 17,000 $18.04 Route 128 South 450 11,973,407 903,373 1,039,084 8.7% 7,913 0 26,100 $19.04 Route 128 West 382 14,151,614 1,101,670 1,145,224 8.1% 336,408 0 7,040 $29.18 Route 3 North 244 11,753,934 1,781,043 1,834,513 15.6% 31,268 0 3,000 $18.96 Route 495 North East 201 6,525,721 885,508 889,650 13.6% (35,780) 0 30,000 $19.48 Route 495 South 623 10,879,327 706,294 732,852 6.7% (18,668) 2,500 35,932 $19.90 Route 495/Mass Pike West 262 11,440,625 1,592,366 1,639,444 14.3% 105,468 0 14,400 $20.80 Route 495/Route 2 West 193 6,247,663 1,072,564 1,077,685 17.2% (79,331) 16,609 0 $18.39 Southern New Hampshire 663 16,190,464 995,231 1,033,254 6.4% 29,518 0 22,518 $17.90 Worcester 263 7,677,020 483,395 496,630 6.5% (11,033) 34,918 0 $17.11 Totals 4,564 161,940,649 13,246,139 13,957,352 8.6% 630,319 60,027 164,990 $20.55 2017 CoStar Group, Inc. CoStar Office Statistics 9
Boston First Quarter 2017 Figures at a Glance Class C Market Statistics First Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Boston/Suffolk County 709 13,981,051 436,826 461,198 3.3% (30,327) 0 0 $24.74 Cambridge 178 2,632,192 18,167 18,487 0.7% 5,421 0 0 $30.09 Close-In Suburbs North 282 2,316,158 62,106 65,250 2.8% (4,066) 0 0 $23.22 Route 128 North 806 8,070,432 248,563 255,850 3.2% (11,817) 0 0 $15.45 Route 128 South 873 7,058,541 292,611 294,611 4.2% (9,609) 0 0 $18.33 Route 128 West 599 6,389,793 276,461 282,524 4.4% 11,700 0 0 $23.76 Route 3 North 293 3,703,199 242,769 242,769 6.6% 7,904 0 0 $17.82 Route 495 North East 372 4,257,589 332,397 334,409 7.9% (17,154) 0 0 $16.85 Route 495 South 1,215 9,202,904 375,977 377,177 4.1% (4,988) 0 0 $16.84 Route 495/Mass Pike West 421 3,439,569 196,909 201,909 5.9% 50,328 0 0 $17.66 Route 495/Route 2 West 356 4,833,937 272,644 272,644 5.6% (8,367) 0 0 $15.78 Southern New Hampshire 1,512 12,227,791 294,407 299,488 2.4% 12,275 0 0 $15.33 Worcester 789 7,487,290 221,199 221,199 3.0% 8,258 0 0 $15.35 Totals 8,405 85,600,446 3,271,036 3,327,515 3.9% 9,558 0 0 $17.83 Total Office Market Statistics First Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Boston/Suffolk County 1,517 112,136,438 7,449,231 8,030,990 7.2% (68,016) 271,000 1,155,320 $37.24 Cambridge 436 31,285,066 301,343 736,496 2.4% 183,325 0 1,160,168 $38.86 Close-In Suburbs North 417 9,507,704 523,688 611,718 6.4% 788,239 850,000 55,117 $24.49 Route 128 North 1,247 33,236,140 2,663,240 2,955,033 8.9% (183,402) 0 442,000 $22.08 Route 128 South 1,394 29,214,369 2,106,152 2,292,256 7.8% (39,376) 0 26,100 $19.16 Route 128 West 1,095 37,265,878 3,060,359 3,524,013 9.5% 368,694 0 1,137,145 $30.94 Route 3 North 566 20,378,974 2,477,247 2,679,314 13.1% (42,225) 0 3,000 $19.06 Route 495 North East 599 14,231,660 2,179,588 2,185,742 15.4% (26,044) 0 30,000 $19.07 Route 495 South 1,857 21,886,508 1,246,421 1,274,179 5.8% (43,135) 2,500 35,932 $19.01 Route 495/Mass Pike West 765 25,802,746 3,168,752 3,261,146 12.6% 86,503 0 59,400 $20.49 Route 495/Route 2 West 565 14,102,271 1,707,731 1,712,852 12.1% (78,770) 16,609 0 $18.71 Southern New Hampshire 2,219 33,163,058 1,747,600 1,790,704 5.4% 132,141 0 51,318 $18.11 Worcester 1,067 17,071,021 938,526 956,105 5.6% 36,804 34,918 0 $17.69 Totals 13,744 399,281,833 29,569,878 32,010,548 8.0% 1,114,738 1,175,027 4,155,500 $21.45 10 CoStar Office Statistics 2017 CoStar Group, Inc.
Figures at a Glance First Quarter 2017 Boston Class A Submarket Statistics First Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Amesbury/Ipswich 1 43,280 0 0 0.0% 0 0 0 $0.00 Attleboro/New Bedfor. 7 712,896 0 0 0.0% 0 0 0 $0.00 Back Bay 35 13,615,588 1,244,566 1,511,284 11.1% (397,962) 0 0 $87.42 Brighton/Allston/Fen. 8 2,320,793 230,134 277,044 11.9% 91,980 265,000 225,000 $0.00 Burlington/Woburn 56 8,044,695 993,045 1,133,643 14.1% (147,059) 0 280,000 $31.50 Charlestown/East Bos. 3 433,710 15,000 15,000 3.5% 0 0 0 $23.60 Chelsea/Revere 4 1,061,117 25,680 25,680 2.4% 0 0 0 $0.00 Concord/Maynard 16 3,020,671 362,523 362,523 12.0% 8,928 0 0 $20.65 Danvers/Beverly 10 2,544,870 176,062 183,314 7.2% (90,230) 0 145,000 $19.25 E Cambridge/Kendall. 58 12,975,621 120,842 267,622 2.1% 108,515 0 936,500 $85.76 Essex/Gloucester 0 0 0 0 0.0% 0 0 0 $0.00 Financial District 66 30,673,740 2,625,662 2,704,024 8.8% 186,930 0 0 $51.68 Fitchburg/Leominster 0 0 0 0 0.0% 0 0 0 $0.00 Framingham/Natick 33 4,415,491 495,457 517,540 11.7% 2,281 0 0 $30.08 Groton/Townsend 0 0 0 0 0.0% 0 0 0 $0.00 Hillsborough 23 2,620,701 424,428 424,428 16.2% 31,626 0 0 $23.29 Hopkinton/Holliston 1 792,755 0 0 0.0% 0 0 0 $0.00 I-95 Corridor South 9 930,381 138,274 138,274 14.9% 2,889 0 0 $23.92 Lawrence/Andover 25 3,405,070 961,683 961,683 28.2% 26,890 0 0 $19.76 Lexington/Arlington 20 2,498,896 351,161 352,861 14.1% 18,597 0 0 $38.15 Lowell/Chelmsford 29 4,921,841 453,435 602,032 12.2% (81,397) 0 0 $20.11 Lynnfield/Wakefield 10 1,316,152 157,056 160,803 12.2% 6,144 0 0 $28.88 Medford/Malden 9 1,266,471 122,063 203,805 16.1% (51,396) 0 55,117 $27.20 Mid-Cambridge/Harvar. 29 4,680,973 25,904 227,271 4.9% (109,621) 0 0 $0.00 Midtown 4 542,781 13,003 13,003 2.4% (7,530) 0 0 $0.00 Newton/Brookline 16 2,326,309 391,429 436,294 18.8% (63,645) 0 102,510 $0.00 North End/Waterfront 2 198,822 0 0 0.0% 0 0 0 $0.00 North Station/Beacon. 3 496,967 0 32,110 6.5% (16,055) 0 0 $0.00 Outlying Worcester 2 281,600 28,121 28,121 10.0% 0 0 0 $0.00 Peabody/Salem 2 143,011 56,450 56,450 39.5% (8,002) 0 0 $20.15 Quincy/Braintree 35 5,264,185 411,689 444,747 8.4% (14,117) 0 0 $24.54 Rockingham 18 1,410,911 33,534 33,534 2.4% 58,722 0 28,800 $19.27 Route 1 South 20 3,252,105 248,284 253,024 7.8% 11,113 0 0 $21.82 Route 24 4 385,596 187,922 189,517 49.1% (1,595) 0 0 $31.34 Route 3 Corridor 12 1,280,535 62,273 71,273 5.6% (33,081) 0 0 $23.49 Route 3 South 3 161,000 25,876 25,876 16.1% (22,368) 0 0 $28.72 Roxbury/Dorchester 13 3,009,757 158,603 158,603 5.3% 22,794 0 0 $0.00 Saugus/Lynn 3 213,293 35,143 35,143 16.5% 14,570 0 0 $18.99 Seaport 16 5,938,023 265,223 265,223 4.5% 45,276 0 921,320 $0.00 Somerville/Everett 4 1,553,326 15,485 15,485 1.0% 850,000 850,000 0 $32.62 South Boston 0 0 0 0 0.0% 0 0 0 $0.00 South End 4 666,526 0 0 0.0% 0 0 0 $0.00 South Suffolk County 3 104,003 3,200 3,200 3.1% 0 0 0 $26.01 Strafford County 3 713,191 0 0 0.0% 0 0 0 $0.00 The Boroughs 48 5,714,306 884,020 902,253 15.8% (71,574) 0 45,000 $19.45 W Cambridge/Alewife 11 1,444,256 67,145 78,850 5.5% 17,007 0 223,668 $44.01 Waltham/Watertown 55 9,184,264 786,724 1,106,013 12.0% 18,599 0 615,595 $37.49 Wellesley/Needham 23 2,715,002 152,914 201,097 7.4% 47,035 0 412,000 $35.34 Wilmington/Reading 6 820,146 96,879 96,879 11.8% (18,982) 0 0 $23.50 Worcester Metro 13 1,625,111 205,811 210,155 12.9% 39,579 0 0 $23.15 Totals 775 151,740,738 13,052,703 14,725,681 9.7% 474,861 1,115,000 3,990,510 $26.45 2017 CoStar Group, Inc. CoStar Office Statistics 11
Boston First Quarter 2017 Figures at a Glance Class B Submarket Statistics First Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Amesbury/Ipswich 58 885,523 19,984 19,984 2.3% (515) 0 0 $24.62 Attleboro/New Bedfor. 367 6,440,219 389,863 405,616 6.3% (17,995) 0 34,000 $18.00 Back Bay 93 2,544,920 146,353 149,193 5.9% 4,204 0 0 $36.60 Brighton/Allston/Fen. 67 2,343,394 134,247 134,247 5.7% (6,173) 0 0 $25.46 Burlington/Woburn 91 4,211,765 201,009 314,036 7.5% 22,026 0 0 $20.36 Charlestown/East Bos. 33 2,934,564 93,517 93,517 3.2% 264,064 0 9,000 $35.61 Chelsea/Revere 27 586,438 64,557 64,557 11.0% 8,869 0 0 $22.50 Concord/Maynard 135 5,105,007 1,036,315 1,037,876 20.3% (83,739) 0 0 $18.57 Danvers/Beverly 69 2,345,705 322,893 327,360 14.0% (2,168) 0 0 $16.52 E Cambridge/Kendall. 30 2,844,328 14,046 14,046 0.5% 115,875 0 0 $35.28 Essex/Gloucester 14 284,403 4,995 4,995 1.8% 8,363 0 17,000 $23.70 Financial District 129 9,570,287 959,547 1,024,026 10.7% (73,129) 0 0 $44.17 Fitchburg/Leominster 58 1,142,656 36,249 39,809 3.5% 4,408 16,609 0 $15.28 Framingham/Natick 112 4,131,021 326,078 341,053 8.3% 71,925 0 0 $23.40 Groton/Townsend 28 338,666 13,464 13,464 4.0% 653 0 0 $19.96 Hillsborough 294 9,195,944 604,439 641,662 7.0% (5,338) 0 0 $17.83 Hopkinton/Holliston 21 552,572 129,558 129,558 23.4% 41,163 0 0 $21.12 I-95 Corridor South 101 1,991,512 162,485 162,485 8.2% 7,298 0 1,932 $20.47 Lawrence/Andover 143 5,640,198 865,524 869,666 15.4% (35,265) 0 30,000 $19.34 Lexington/Arlington 72 1,484,670 116,586 116,586 7.9% 72,346 0 0 $25.33 Lowell/Chelmsford 216 11,415,268 1,767,579 1,821,049 16.0% 30,615 0 3,000 $18.93 Lynnfield/Wakefield 33 912,261 58,599 59,799 6.6% 2,296 0 0 $13.98 Medford/Malden 43 1,478,274 199,390 199,390 13.5% 2,300 0 0 $20.36 Mid-Cambridge/Harvar. 98 5,158,297 54,222 105,222 2.0% 40,017 0 0 $42.69 Midtown 59 3,794,559 168,397 169,497 4.5% 4,079 0 0 $35.89 Newton/Brookline 131 4,246,086 255,134 267,985 6.3% 66,793 0 0 $35.21 North End/Waterfront 33 1,666,351 45,793 49,266 3.0% (38) 0 0 $28.87 North Station/Beacon. 49 6,295,502 115,510 118,568 1.9% 2,668 0 0 $40.95 Outlying Worcester 124 1,808,405 173,307 173,307 9.6% 5,043 34,918 0 $16.13 Peabody/Salem 60 1,768,443 143,886 143,886 8.1% 23,763 0 0 $16.96 Quincy/Braintree 115 4,017,774 217,901 217,901 5.4% (1,495) 0 26,100 $20.74 Rockingham 268 5,144,242 310,308 311,108 6.0% (5,720) 0 22,518 $18.95 Route 1 South 99 3,788,693 415,057 548,153 14.5% 20,457 0 0 $17.86 Route 24 95 1,754,945 122,922 125,537 7.2% (9,362) 0 0 $18.49 Route 3 Corridor 141 2,411,995 147,493 147,493 6.1% (1,687) 0 0 $20.06 Route 3 South 155 2,447,596 153,946 164,751 6.7% (7,971) 2,500 0 $20.79 Roxbury/Dorchester 72 2,619,032 85,088 85,088 3.2% 5,671 0 0 $27.35 Saugus/Lynn 54 1,477,891 67,081 81,296 5.5% 30,413 0 0 $21.00 Seaport 55 6,308,005 626,450 684,787 10.9% (171,869) 0 0 $37.88 Somerville/Everett 48 1,245,920 34,407 37,551 3.0% (17,468) 0 0 $33.34 South Boston 11 139,786 59,288 59,288 42.4% 0 0 0 $0.00 South End 28 1,667,831 16,563 16,563 1.0% (1,338) 0 0 $0.00 South Suffolk County 22 270,446 6,261 6,261 2.3% 8,739 6,000 0 $14.88 Strafford County 101 1,850,278 80,484 80,484 4.3% 40,576 0 0 $15.42 The Boroughs 129 6,757,032 1,136,730 1,168,833 17.3% (7,620) 0 14,400 $18.59 W Cambridge/Alewife 32 1,549,399 1,017 24,998 1.6% 6,111 0 0 $29.85 Waltham/Watertown 88 6,056,919 576,720 593,170 9.8% 231,843 0 0 $27.44 Wellesley/Needham 91 2,363,939 153,230 167,483 7.1% (34,574) 0 7,040 $28.32 Wilmington/Reading 33 1,083,073 101,579 101,579 9.4% (12,719) 0 0 $21.14 Worcester Metro 139 5,868,615 310,088 323,323 5.5% (16,076) 0 0 $17.47 Totals 4,564 161,940,649 13,246,139 13,957,352 8.6% 630,319 60,027 164,990 $20.55 12 CoStar Office Statistics 2017 CoStar Group, Inc.
Figures at a Glance First Quarter 2017 Boston Class C Submarket Statistics First Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Amesbury/Ipswich 95 743,387 42,854 42,854 5.8% (2,300) 0 0 $16.65 Attleboro/New Bedfor. 761 5,749,218 183,041 184,241 3.2% 21,944 0 0 $15.98 Back Bay 95 1,303,600 36,050 40,372 3.1% (6,089) 0 0 $33.79 Brighton/Allston/Fen. 96 2,718,195 51,763 56,625 2.1% (38,050) 0 0 $25.29 Burlington/Woburn 163 1,705,455 41,021 41,021 2.4% (2,454) 0 0 $16.45 Charlestown/East Bos. 51 714,365 20,077 20,077 2.8% 2,224 0 0 $24.96 Chelsea/Revere 87 592,499 28,480 28,480 4.8% (5,700) 0 0 $28.16 Concord/Maynard 194 2,977,315 206,514 206,514 6.9% (3,912) 0 0 $17.27 Danvers/Beverly 116 1,186,645 46,205 46,205 3.9% 1,626 0 0 $15.81 E Cambridge/Kendall. 28 578,125 6,600 6,600 1.1% 4,350 0 0 $33.76 Essex/Gloucester 65 589,978 14,300 17,600 3.0% (7,635) 0 0 $17.62 Financial District 71 2,553,441 224,193 224,193 8.8% 4,975 0 0 $33.46 Fitchburg/Leominster 162 1,856,622 66,130 66,130 3.6% (4,455) 0 0 $14.38 Framingham/Natick 246 1,959,310 121,931 121,931 6.2% 34,641 0 0 $16.69 Groton/Townsend 57 384,686 2,500 2,500 0.6% 1,180 0 0 $16.36 Hillsborough 727 6,542,496 152,506 152,506 2.3% 31,160 0 0 $14.17 Hopkinton/Holliston 53 460,553 23,954 23,954 5.2% 645 0 0 $15.75 I-95 Corridor South 185 1,573,084 89,545 89,545 5.7% 1,549 0 0 $16.54 Lawrence/Andover 277 3,514,202 289,543 291,555 8.3% (14,854) 0 0 $16.89 Lexington/Arlington 135 1,180,307 8,407 8,407 0.7% 1,116 0 0 $27.03 Lowell/Chelmsford 236 3,318,513 240,269 240,269 7.2% 6,724 0 0 $17.92 Lynnfield/Wakefield 61 443,566 2,730 2,730 0.6% 0 0 0 $20.94 Medford/Malden 97 819,862 31,876 31,876 3.9% 4,778 0 0 $19.77 Mid-Cambridge/Harvar. 91 1,213,660 3,651 3,651 0.3% 330 0 0 $42.43 Midtown 52 1,400,226 12,468 12,468 0.9% 8,932 0 0 $22.81 Newton/Brookline 199 2,186,850 111,417 114,380 5.2% 12,297 0 0 $25.68 North End/Waterfront 19 421,313 0 0 0.0% 0 0 0 $0.00 North Station/Beacon. 46 663,800 2,144 2,144 0.3% (144) 0 0 $29.66 Outlying Worcester 406 3,243,050 121,255 121,255 3.7% (2,204) 0 0 $13.93 Peabody/Salem 170 1,762,340 59,937 63,564 3.6% 4,943 0 0 $12.80 Quincy/Braintree 232 1,709,489 154,215 156,215 9.1% (10,250) 0 0 $15.89 Rockingham 599 4,323,634 116,722 121,803 2.8% (23,836) 0 0 $17.41 Route 1 South 131 1,174,744 35,076 35,076 3.0% 16,416 0 0 $17.76 Route 24 254 2,397,199 44,758 44,758 1.9% (17,493) 0 0 $20.21 Route 3 Corridor 256 1,777,109 58,562 58,562 3.3% 1,718 0 0 $19.17 Route 3 South 269 1,880,602 103,391 103,391 5.5% (28,481) 0 0 $19.42 Roxbury/Dorchester 114 1,564,420 3,300 3,300 0.2% 1,462 0 0 $24.57 Saugus/Lynn 154 1,725,599 57,839 58,199 3.4% 10,223 0 0 $16.91 Seaport 21 903,697 18,523 33,711 3.7% (1,702) 0 0 $36.04 Somerville/Everett 98 903,797 1,750 4,894 0.5% (3,144) 0 0 $23.40 South Boston 49 343,456 14,308 14,308 4.2% (1,608) 0 0 $25.47 South End 36 820,076 0 0 0.0% 0 0 0 $0.00 South Suffolk County 59 574,462 54,000 54,000 9.4% (327) 0 0 $14.39 Strafford County 186 1,361,661 25,179 25,179 1.8% 4,951 0 0 $14.49 The Boroughs 122 1,019,706 51,024 56,024 5.5% 15,042 0 0 $19.93 W Cambridge/Alewife 59 840,407 7,916 8,236 1.0% 741 0 0 $21.76 Waltham/Watertown 160 1,906,286 112,106 115,206 6.0% (2,847) 0 0 $19.85 Wellesley/Needham 105 1,116,350 44,531 44,531 4.0% 1,134 0 0 $24.94 Wilmington/Reading 77 656,849 26,531 26,531 4.0% (18,520) 0 0 $18.36 Worcester Metro 383 4,244,240 99,944 99,944 2.4% 10,462 0 0 $16.80 Totals 8,405 85,600,446 3,271,036 3,327,515 3.9% 9,558 0 0 $17.83 2017 CoStar Group, Inc. CoStar Office Statistics 13
Boston First Quarter 2017 Figures at a Glance Total Office Submarket Statistics First Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Amesbury/Ipswich 154 1,672,190 62,838 62,838 3.8% (2,815) 0 0 $19.50 Attleboro/New Bedfor. 1,135 12,902,333 572,904 589,857 4.6% 3,949 0 34,000 $16.72 Back Bay 223 17,464,108 1,426,969 1,700,849 9.7% (399,847) 0 0 $61.39 Brighton/Allston/Fen. 171 7,382,382 416,144 467,916 6.3% 47,757 265,000 225,000 $25.39 Burlington/Woburn 310 13,961,915 1,235,075 1,488,700 10.7% (127,487) 0 280,000 $28.96 Charlestown/East Bos. 87 4,082,639 128,594 128,594 3.1% 266,288 0 9,000 $28.17 Chelsea/Revere 118 2,240,054 118,717 118,717 5.3% 3,169 0 0 $25.11 Concord/Maynard 345 11,102,993 1,605,352 1,606,913 14.5% (78,723) 0 0 $19.23 Danvers/Beverly 195 6,077,220 545,160 556,879 9.2% (90,772) 0 145,000 $18.51 E Cambridge/Kendall. 116 16,398,074 141,488 288,268 1.8% 228,740 0 936,500 $41.74 Essex/Gloucester 79 874,381 19,295 22,595 2.6% 728 0 17,000 $20.32 Financial District 266 42,797,468 3,809,402 3,952,243 9.2% 118,776 0 0 $46.12 Fitchburg/Leominster 220 2,999,278 102,379 105,939 3.5% (47) 16,609 0 $14.59 Framingham/Natick 391 10,505,822 943,466 980,524 9.3% 108,847 0 0 $22.89 Groton/Townsend 85 723,352 15,964 15,964 2.2% 1,833 0 0 $18.78 Hillsborough 1,044 18,359,141 1,181,373 1,218,596 6.6% 57,448 0 0 $18.26 Hopkinton/Holliston 75 1,805,880 153,512 153,512 8.5% 41,808 0 0 $20.18 I-95 Corridor South 295 4,494,977 390,304 390,304 8.7% 11,736 0 1,932 $20.04 Lawrence/Andover 445 12,559,470 2,116,750 2,122,904 16.9% (23,229) 0 30,000 $19.05 Lexington/Arlington 227 5,163,873 476,154 477,854 9.3% 92,059 0 0 $30.70 Lowell/Chelmsford 481 19,655,622 2,461,283 2,663,350 13.6% (44,058) 0 3,000 $19.06 Lynnfield/Wakefield 104 2,671,979 218,385 223,332 8.4% 8,440 0 0 $24.12 Medford/Malden 149 3,564,607 353,329 435,071 12.2% (44,318) 0 55,117 $21.92 Mid-Cambridge/Harvar. 218 11,052,930 83,777 336,144 3.0% (69,274) 0 0 $42.63 Midtown 115 5,737,566 193,868 194,968 3.4% 5,481 0 0 $35.16 Newton/Brookline 346 8,759,245 757,980 818,659 9.3% 15,445 0 102,510 $30.84 North End/Waterfront 54 2,286,486 45,793 49,266 2.2% (38) 0 0 $28.87 North Station/Beacon. 98 7,456,269 117,654 152,822 2.0% (13,531) 0 0 $39.95 Outlying Worcester 532 5,333,055 322,683 322,683 6.1% 2,839 34,918 0 $14.93 Peabody/Salem 232 3,673,794 260,273 263,900 7.2% 20,704 0 0 $16.14 Quincy/Braintree 382 10,991,448 783,805 818,863 7.5% (25,862) 0 26,100 $18.93 Rockingham 885 10,878,787 460,564 466,445 4.3% 29,166 0 51,318 $18.59 Route 1 South 250 8,215,542 698,417 836,253 10.2% 47,986 0 0 $18.23 Route 24 353 4,537,740 355,602 359,812 7.9% (28,450) 0 0 $19.38 Route 3 Corridor 409 5,469,639 268,328 277,328 5.1% (33,050) 0 0 $19.98 Route 3 South 427 4,489,198 283,213 294,018 6.5% (58,820) 2,500 0 $21.11 Roxbury/Dorchester 199 7,193,209 246,991 246,991 3.4% 29,927 0 0 $26.61 Saugus/Lynn 211 3,416,783 160,063 174,638 5.1% 55,206 0 0 $19.12 Seaport 92 13,149,725 910,196 983,721 7.5% (128,295) 0 921,320 $37.26 Somerville/Everett 150 3,703,043 51,642 57,930 1.6% 829,388 850,000 0 $26.70 South Boston 60 483,242 73,596 73,596 15.2% (1,608) 0 0 $25.47 South End 68 3,154,433 16,563 16,563 0.5% (1,338) 0 0 $0.00 South Suffolk County 84 948,911 63,461 63,461 6.7% 8,412 6,000 0 $15.03 Strafford County 290 3,925,130 105,663 105,663 2.7% 45,527 0 0 $15.24 The Boroughs 299 13,491,044 2,071,774 2,127,110 15.8% (64,152) 0 59,400 $19.09 W Cambridge/Alewife 102 3,834,062 76,078 112,084 2.9% 23,859 0 223,668 $34.53 Waltham/Watertown 303 17,147,469 1,475,550 1,814,389 10.6% 247,595 0 615,595 $30.94 Wellesley/Needham 219 6,195,291 350,675 413,111 6.7% 13,595 0 419,040 $31.11 Wilmington/Reading 116 2,560,068 224,989 224,989 8.8% (50,221) 0 0 $20.31 Worcester Metro 535 11,737,966 615,843 633,422 5.4% 33,965 0 0 $18.83 Totals 13,744 399,281,833 29,569,878 32,010,548 8.0% 1,114,738 1,175,027 4,155,500 $21.45 14 CoStar Office Statistics 2017 CoStar Group, Inc.
Figures at a Glance First Quarter 2017 Boston Class A Market Statistics First Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 126 51,465,921 4,148,454 4,525,644 8.8% (189,341) 0 921,320 $64.65 Suburban 649 100,274,817 8,904,249 10,200,037 10.2% 664,202 1,115,000 3,069,190 $25.14 Totals 775 151,740,738 13,052,703 14,725,681 9.7% 474,861 1,115,000 3,990,510 $26.45 Class B Market Statistics First Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 418 30,179,624 2,062,050 2,195,337 7.3% (234,085) 0 0 $39.60 Suburban 4,146 131,761,025 11,184,089 11,762,015 8.9% 864,404 60,027 164,990 $19.88 Totals 4,564 161,940,649 13,246,139 13,957,352 8.6% 630,319 60,027 164,990 $20.55 Class C Market Statistics First Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 304 7,246,077 293,378 312,888 4.3% 5,972 0 0 $33.56 Suburban 8,101 78,354,369 2,977,658 3,014,627 3.8% 3,586 0 0 $17.56 Totals 8,405 85,600,446 3,271,036 3,327,515 3.9% 9,558 0 0 $17.83 Class A & B Market Statistics First Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 544 81,645,545 6,210,504 6,720,981 8.2% (423,426) 0 921,320 $47.94 Suburban 4,795 232,035,842 20,088,338 21,962,052 9.5% 1,528,606 1,175,027 3,234,180 $21.65 Totals 5,339 313,681,387 26,298,842 28,683,033 9.1% 1,105,180 1,175,027 4,155,500 $22.54 Total Office Market Statistics First Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 848 88,891,622 6,503,882 7,033,869 7.9% (417,454) 0 921,320 $46.02 Suburban 12,896 310,390,211 23,065,996 24,976,679 8.0% 1,532,192 1,175,027 3,234,180 $20.70 Totals 13,744 399,281,833 29,569,878 32,010,548 8.0% 1,114,738 1,175,027 4,155,500 $21.45 2017 CoStar Group, Inc. CoStar Office Statistics 15
Boston First Quarter 2017 Figures at a Glance 16 CoStar Office Statistics 2017 CoStar Group, Inc.
Leasing Activity First Quarter 2017 Boston Historical Rental Rates Based on Full-Service Equivalent Rental Rates A B C Total Market $50.00 $45.00 $40.00 $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 1998 1q 2000 1q 2002 1q 2004 1q 2006 1q 2008 1q 2010 1q 2012 1q 2014 1q 2016 1q by Available Space Type by Class Percent of All Vacant Space in Direct vs. Sublet Percent of All Vacant Space by Class Boston United States Boston United States 8% 5% 10% 13% 44% 47% 46% 40% 92% 95% Direct Sublet Direct Sublet Class A Class B Class C Class A Class B Class C U.S. Rental Rate Comparison Based on Full-Service Equivalent Rental Rates Future Space Available Space Scheduled to be Available for Occupancy* $30.00 Boston United States 6.0 $25.00 5.0 4.82 $20.00 $15.00 $10.00 4.0 3.0 2.0 2.43 $5.00 $0.00 2015 3q 2016 3q 1.0 0.0 0.50 0.31 0.05 2017 2q 2017 4q 2018 2q 0.83 * Includes Under Construction Spaces 2017 CoStar Group, Inc. CoStar Office Statistics 17
Boston First Quarter 2017 Leasing Activity Select Top Oce Leases Based on Leased Square Footage For Deals Signed in 2017 Building Submarket SF Qtr Tenant Name Tenant Rep Company Landlord Rep Company 1 Bronstein Industrial Center Seaport 52,586 1st AmericaÆs Test Kitchen Transwestern RBJ JLL 2 780 Memorial Dr Mid-Cambridge/Harvard Sq 51,000 1st N/A N/A CBRE - New England 3 Copley Place - Tower 2 Back Bay 47,218 1st N/A N/A Transwestern RBJ 4 Boston Landing - East Bldg Brighton/Allston/Fenway 46,910 1st N/A N/A N/A 5 26 Forest St The Boroughs 46,061 1st Babcock Power Sales Kelleher & Sadowsky Associates, Inc JLL 6 21 Hickory Dr Waltham/Watertown 43,290 1st N/A N/A CBRE - New England 7 200 Cambridgepark Dr W Cambridge/Alewife 42,561 1st N/A N/A Newmark Grubb Knight Frank 8 500 Harrison Ave* South End 40,000 1st Department of Developmental Services N/A GTI Properties 9 Copley Place - Tower 1 Back Bay 39,414 1st N/A Transwestern RBJ Transwestern RBJ 10 85 School St Waltham/Watertown 32,000 1st Markforged Inc Cushman & Wakeeld Boston Realty Advisors 11 100 Pennsylvania Ave Framingham/Natick 30,655 1st Disruptor Beam Inc N/A JLL 12 Westford Technology Park - Bldg 3 Lowell/Chelmsford 29,930 1st N/A N/A Newmark Grubb Knight Frank 13 Copley Place - Tower 2 Back Bay 29,573 1st N/A N/A Transwestern RBJ 14 Crawford Place Wellesley/Needham 29,114 1st Miraca Life Sciences Transwestern RBJ The Bulnch Companies, Inc. 15 800 District Ave Burlington/Woburn 28,264 1st N/A N/A JLL 16 200 Wheeler Rd Burlington/Woburn 27,946 1st N/A N/A Cushman & Wakeeld 17 Cutler Lake Corporate Center Wellesley/Needham 27,361 1st N/A N/A Newmark Grubb Knight Frank 18 80 Central St* Concord/Maynard 27,052 1st Blue Coat Systems, Inc. N/A Transwestern RBJ 19 Exchange Place Financial District 26,962 1st N/A N/A Cushman & Wakeeld 20 25 Thomson Pl Seaport 26,961 1st N/A N/A JLL 21 Kindred Medical Oces I-95 Corridor South 26,000 1st Bay Cove N/A Colliers International 22 85 Northwest Blvd Hillsborough 25,941 1st N/A N/A Tamposi Company Inc 23 225 Franklin St Financial District 25,240 1st N/A N/A Newmark Grubb Knight Frank 24 Times Building* Attleboro/New Bedford 25,000 1st Bristol County District Atty Direct Deal Time Square Realty 25 225 Franklin St Financial District 24,930 1st N/A N/A Newmark Grubb Knight Frank 26 55 Chapel St* Newton/Brookline 24,000 1st Aircuity Inc N/A Transwestern RBJ 27 700 District Ave Burlington/Woburn 23,009 1st N/A N/A Cushman & Wakeeld 28 70 Everett Ave Chelsea/Revere 22,500 1st N/A N/A Colliers International 29 117 Flanders Rd* The Boroughs 21,242 1st PANalytical Inc. N/A Lincoln Property Company 30 25 Constitution Dr Hillsborough 21,000 1st N/A N/A Colliers International 31 1 Wall St* Burlington/Woburn 20,894 1st Zoran Corporation N/A Newmark Grubb Knight Frank 32 20 Burlington Mall Rd Burlington/Woburn 20,269 1st Infogroup Inc Cushman & Wakeeld R.J. Kelly Company 33 International Cargo Port - Oce Seaport 19,863 1st N/A N/A CBRE - New England 34 200 Sidney St Mid-Cambridge/Harvard Sq 19,817 1st N/A N/A Transwestern RBJ 35 125 CambridgePark Dr W Cambridge/Alewife 19,791 1st N/A N/A CBRE - New England 36 101 Federal Street Financial District 19,500 1st N/A N/A Newmark Grubb Knight Frank 37 On the Greenway Midtown 19,283 1st Smartsheet Avison Young CBRE - New England 38 One Cambridge Place E Cambridge/Kendall Sq 18,744 1st Anokian JLL Transwestern RBJ 39 404 Wyman St* Waltham/Watertown 18,614 1st Celerant Consulting, Inc. N/A Wyman Street Advisors 40 1 Corporate Dr Lawrence/Andover 18,443 1st Securadyne N/A JLL * Renewal 18 CoStar Office Statistics 2017 CoStar Group, Inc.
Sales Activity First Quarter 2017 Boston The Optimist Sales Index Average of Two Highest Price/SF's and Two Lowest Cap Rates Per Quarter 6.0% Cap Rate Price/SF $1,200 5.0% $1,100 Cap Rate Percentage 4.0% 3.0% 2.0% 1.0% $1,000 $900 $800 $700 $600 Dollars/SF 0.0% 2014 1q 2015 1q 2016 1q $500 Source: CoStar COMPS Sales Volume & Price Sales Analysis by Building Size Based on Office Building Sales of 15,000 SF and Larger Based on Office Building Sales From Jan. 2016 - Dec. 2016 $4,000 Sales Volume Price/SF $500 Bldg Size # RBA $ Volume Price/SF Cap Rate Millions of Sales Volume Dollars $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $450 $400 $350 $300 $250 $200 $150 $100 Price/SF < 50,000 SF 245 3,222,328 $543,554,551 $ 168.68 7.14% 50K-249K SF 250K-499K SF 77 8,624,322 $2,345,969,410 $ 272.02 6.33% 13 4,183,481 $1,649,617,549 $ 394.32 6.26% $500 $50 $0 $0 >500K SF - - - $ - - 2013 1q 2014 1q 2015 1q 2016 1q Source: CoStar COMPS Source: CoStar COMPS U.S. Price/SF Comparison Based on Office Building Sales of 15,000 SF and Larger U.S. Cap Rate Comparison Based on Office Building Sales of 15,000 SF and Larger $500 Boston US 9.0% Boston US $450 8.0% Dollars per SF $400 $350 $300 $250 Cap Rate Percentage 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% $200 1.0% $150 0.0% 2013 1q 2014 1q 2015 1q 2016 1q 2013 1q 2014 1q 2015 1q 2016 1q Source: CoStar COMPS Source: CoStar COMPS 2017 CoStar Group, Inc. CoStar Office Statistics 19
20 CoStar Office Statistics 2017 CoStar Group, Inc. Boston First Quarter 2017 Sales Activity