4th Quarter 2010: Boston’s Ravenous Appetite Devours Retail Vacancies
With Bostonians eating out more frequently and spending more on luxury items, seasoned restaurateurs have taken the proverbial “bull by the horns” and led the charge, absorbing dozens of retail spaces by both expanded existing spaces and having opened new concepts.
Led by Boston’s entrepreneurial restaurateurs, Boston Retail Property had a strong year in 2010 with the vacancy rate for the Greater Boston Area dropping to 5.1% and realizing a net absorption of 2.8 million sq ft. Asking rents dropped slightly by 50 cents/sq ft.
According to BostonChefs.com, the restaurateurs opened innumerable new restaurants including: Deuxave, Lolita, Met Club Back Bay, Zocalo, Noche, Towne and Tasty Burger in the Back Bay. Island Creek Oyster Bar in Kenmore Square, Bondir in Kendall Square, Russell House Tavern in Harvard Square, Stoddard’s and Petit Robert Central in Downtown Crossing, The Gallows in the South End, The Whiskey Priest and Menton in the Seaport District, Citizen in Fenway, Cognac Bistro in Coolidge Corner, Lumière in Newton, and Foundry on Elm in Davis Square.
Boston Proper had a very respectable 3.8% vacancy rate and filled an additional 315,000 sq ft of previously vacant retail space. Cambridge had a vacancy rate of 3.4%: the lowest retail vacancy rate in all of Greater Boston. Somerville followed closely behind with a 4.1% retail vacancy rate.
Per usual: Harvard Square and Back Bay were among the most expensive neighborhoods to lease retail space. Harvard Square has asking rents of $120/sq ft and parts of Back Bay have asking rents approaching $150/sq ft although the average for Back Bay was $57/sq ft. North Station and Beacon Hill were close behind with average asking rents of $46/sq ft.
Other neighborhood averages were as follows: Brighton, Allston & Fenway were $28/sq ft, East Boston was $16/sq ft, Roxbury & Dorchester were $19/sq ft, Davis Sq was $35/sq ft, Central Square was $40/sq ft, Medford and Malden were $13/sq ft, South Boston was $19.50/sq ft, The Seaport District was $38/sq ft, and Newton & Brookline averaged $32/sq ft.
The Federal Reserve reports that retail sales rose nationwide for the sixth month in a row. Sales rose 0.6 percent last month to $381 billion, lifting sales for the year by the largest amount in more than a decade.
Obviously: the experienced restaurateurs felt the economy shifting and displayed their confidence by absorbing thousands of square feet of vacant retail spaces. Overall: even though rents have decreased slightly, Boston and Greater Boston has a “tight” retail market which bodes well for the strength of the area economy and commercial property owners.
