As 2019 barrels toward its close, it’s clear that some Boston-area real estate and development trends will be less escapable than others in the new year. Here they are.
Life sciences projects. There are several either planned or going up around the region right now, either standing alone or anchoring larger projects. They span from from Somerville to Watertown to Somerville again to different parts of Boston, including South Boston, Charlestown, the Seaport District, and Allston.
The proliferation of life sciences (or biotechnology) hubs in the Boston area is no surprise, given the industry’s footprint. From 2009 to 2019, the number life sciences jobs here grew 28 percent and the amount of newly developed commercial space for life sciences grew 71 percent, or 12 million-plus square feet (the equivalent of around 10 Prus).
The proliferation is also a sign of developers’ and real estate lenders’ bets on the industry continuing to grow, come what may in the larger economy.
Transit-oriented development battles. The region’s perpetually rising rents and home prices have pushed—and will continue to push—residents farther from the business districts where they work. This has led—and continues to lead—to some of the worst vehicular traffic on earth.
But it has also put a premium on proximity to public transit. And that in turn has put a premium on development sites near public transit. Build apartments and condos near a T or commuter rail stop, the reasoning goes, and watch tenants and buyers line up.
Recent battles in Newton and Hyde Park suggest such projects are easier said than done. Whatever the premium on proximity—or perhaps because of it—some residents and elected officials don’t want these projects popping up in their backyards. Such battles are likely to become more pitched in 2020, unless prices and rents come down significantly.
Parking lots. Surface parking lots are slowly disappearing, especially in downtown Boston and nearby. This is a function of both evolving transportation options and infrastructure—including more bike shares and bus lanes—and the sheer value of some of these lots.
The last surface parking lot along Newbury Street in Back Bay, for instance, went for $40 million over the summer, and is likely to be reborn as some sort of mixed-use development heavy on retail. One in Bay Village could host a residential building. And on and on.
To own a Boston-area parking lot in a prime location at the start of 2020 is to be in a very good position indeed.
Pivots from residential to commercial. The developers behind at least two major projects in Boston proper—the redevelopment of the old Edison Power Plant in South Boston and the planned tower at 350 Summer Street in the Seaport District—are trying to reduce the amount of residential space in each in favor of commercial space.
This could become a trend in 2020 as the region’s economic outlook remains sunny whatever the storm clouds nationally and globally (Massachusetts’s unemployment rate is around 3 percent right now, below the overall U.S. one).
Steady demand for office and lab space is already sending more companies searching beyond traditional commercial hubs—witness the veritable parlor game of divining the next Kendall Square—and keeping office asking rents high all around.
Zoning changes. An early June report from the Massachusetts Smart Growth Alliance and six other organizations concluded that municipalities in the Boston region “have been over-restricting housing development relative to need.”
In other words, in many of the 100 towns and cities that the report tracked, the zoning is so stacked against the sort of multifamily development that the area desperately needs in order to dent its high housing costs that it makes such development virtually impossible, or at least incredibly laborious.
That reality is slowly—slowly—dawning on residents and their elected officials, who have been moving toward major zoning changes in different municipalities that would facilitate more multifamily and/or affordable housing.
Somerville, for instance, is inching toward its biggest zoning overhaul since 1990. And while over the border in Cambridge the City Council tabled a contentious affordable housing zoning change in early September, the proposal is far from dead. As for Boston proper, a scandal surrounding alleged bribery at the city Zoning Board of Appeal could lead to big changes regarding how the region’s biggest municipality looks at zoning.
Co-everything. Flex space-slash-coworking as a share of the Boston region’s office market increased 0.4 percent, to 1.7 percent, from the second quarter of 2018 to the same time period in 2019, according to commercial brokerage CBRE. What seems like a small gain is actually pretty sizable: That 0.4 percent represented 847,000 square feet.
Coworking/flex space now accounts for well more than 3.7 million square feet of the region’s office space, and the amount only appears to be growing. The share was basically zero percent in 2010, for instance, and 1.2 percent in 2017. Even starker: Coworking colossus WeWork’s amount of Boston-area space increased more than 90 percent year over year in the second quarter, to 1.511 million square feet.
At the same time, co-living, the residential cousin to commercial coworking, has become an inescapable presence in the region in just the past year. That is a trend likely to continue in 2020 as the Boston region remains very much on the radar of major co-living operators. Something about the area’s jobs base (lots of tech and biotech) and its high student and grad student population make it particularly desirable.
It should be noted, too, that the upward trend in coworking and co-living in the Boston area should continue in 2020, whatever the overall turbulence in the former’s industry.
Decisions and changes re: major projects. Just as 2019 has hosted its fair share of momentous turns, so shall 2020. From Suffolk Downs in East Boston to Harvard’s big footprint in Allston, from South Boston and Dorchester to Somerville and Newton, 2020 is likely decision time on a number of major projects.
Will the trend bend toward yeas or nays from public agencies and officials? Will developers find themselves heading back to the proverbial drawing board? Will they do so under a tougher financing market because of a recession? Stay tuned.