GREATER BOSTON MARKET VIEWPOINTMidway through 2013, the vacancy rate in the Boston offi ce market is 12.4%, compared to 13.0% at the beginning of the year and 14.5% twelve months ago

GREATER BOSTONMARKET VIEWPOINT2ND QUARTER 2013

Accelerating success.

Midway through 2013, the vacancy rate in the Boston offi ce market is 12.4%, compared to 13.0% at the beginning of the year and 14.5% twelve months ago. Net occupancy increased by 435,000 square feet during the fi rst two quarters of the year, marking the ninth consecutive quarter of positive absorption. While the market remains approximately 500,000 square feet shy of its peak occupancy recorded in the third quarter 2008, it is on pace to return to this level by year-end and to exceed this in 2014.

Selected statistics at the close of the quarter include:

Submarket/Class Vacancy RateAbsorption (000s)

Q2 2013 YTD

Financial District – Class A 15.3% (130) (203)

Financial District – Class B 12.4% 3 355

Back Bay – Class A 8.9% 70 (45)

Back Bay – Class B 13.8% 68 100

Seaport – Class A 10.0% 2 29

Seaport – Class B 11.3% (44) 54

SUPPLY AND DEMAND

• Supply totals over 60 million square feet, with over 80 percent of the inventory located in the Financial District, Back Bay and Seaport submarkets. Nearly half this inventory is in the Class A tower market that includes 40 buildings and totals 29 million square feet.

• At the end of the second quarter, there were over 100 tenants in the market seeking an aggregate of nearly 4 million square feet of offi ce space. Although the median requirement is 12,000 square feet, some of the larger requirements include:

Tenant SF Industry

Goodwin Procter, LLP (c) 350,000 Legal

PriceWaterhouse Coopers (c) 300,000 Business Services

Analysis Group 150,000 Business Services

Monster.com 150,000 Online Recruitment Services

Choate Hall & Stewart 150,000 Legal

Sonos 100,000 Technology

Natixis 125,000 Investment Management

Shawmut Construction 75,000 Construction

(c) committed

VELOCITY

• Velocity (signed lease activity) totaled approximately 800,000 square feet during the quarter, representing approximately 30 transactions.

• Arnold Worldwide’s 125,000-square-foot lease to relocate to the Burnham Building in Downtown Crossing represented the largest transaction executed during the second quarter.

Selected second quarter transactions include:

Tenant Address SF

Arnold Worldwide 10 Summer Street 125,000

Ernst & Young 200 Clarendon Street 100,000

Smart Traveler 226 Causeway Street 70,000

Oliver Wyman 200 Clarendon Street 56,000

Latham & Watkins 200 Clarendon Street 50,000

MetLife One Financial Center 50,000

Maximus 55 Summer Street 47,000

Eastern Bank 265 Franklin Street 45,000

• The Seaport comprises roughly 10% of Boston’s offi ce supply but in the past two years has captured a disproportionate share of leasing activity with two to three times its market share. As a result, tenants are now fi nding fewer options in this submarket and 2013 lease activity has been more in line with the respective size of the submarkets, with the Financial District garnering 55% of year-to-date lease activity and Seaport 10.5%.

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MARKET VIEWPOINT | Q2 2013

p. 2 | Colliers International

Boston Overview

ABSORPTION AND VACANCY

• The vacancy rate declined from 12.7% to 12.4% during the quarter with 138,000 square feet of positive absorption.

• Positive absorption in the Back Bay was due in part to online retailer Wayfair’s 105,000-square-foot lease at Copley Place. The company will be relocating in June 2014 from 95,000 square feet at 177 Huntington Avenue.

• Net absorption in the Financial District was negative 127,000 square feet due in part to contractions by MetLife, Bank of America and Mass Housing. This represents the fi rst quarter of negative absorption in the Financial District since the fi rst quarter 2011. Given the strength of current market interest in the Financial District, a rebound is anticipated during the second half of the year.

• Over 100,000 square feet of positive absorption in the North Station submarket pushed the vacancy in this submarket to 7.1%. This was attributed to transactions executed at 226 Causeway Street, where Smart Traveler leased 70,000 square feet and Stantec took 20,000 square feet.

• Net absorption of 1 to 1.5 million square feet per year through 2015 should lower the vacancy rate to approximately 11%.

RENTAL RATES

• Rental rates are rising across the market, with the most notable increase in the Seaport where asking rents for buildings that were in the high-$20s twelve months ago are now fi rmly in the mid-$30s per square foot. Selected spaces in the Back Bay have appreciated as well, with Class A lease comparables in the $60s to $70s per square foot.

The spread between asking rents in various segments of the market is depicted in the following table.

Space Type Rental Range/SF

Class A – High Rise $55 - $75

Class A – Mid Rise $45 - $55

Class A – Low Rise $40 - $45

Class B $25 - $45

DEVELOPMENT

• In addition to build-to-suit construction underway for Vertex (1.1 million SF), Liberty Mutual (590,000 SF), and State Street Bank (500,000 SF), the development pipeline is active. Goodwin Procter’s commitment to what will be the fourth offi ce building at Fan Pier will add another 350,000 SF to inventory.

• Construction has begun on the Burnham Building, Millennium’s 1.2-million-square foot mixed-use development at Downtown Crossing which is expected to include 200,000 square feet of offi ce space of which 125,000 square feet is leased to Arnold Worldwide, expected to take occupancy by mid-2014.

• Speculative construction has begun at 1325 Boylston Street, Samuels & Associates mixed-use project in the Fenway submarket which will include 230,000 SF of offi ce space.

• Both Skanska and New England Development are planning new offi ce buildings at Seaport Square and Pier 4, respectively, which will combine to add approximately 800,000 square feet to the Seaport offi ce supply.

TRENDS

• As the market edges closer to equilibrium, net absorption is expected to be strong over the next few years.

• Absorption in the Seaport and Financial Districts will be reliant in part on out-of-market tenants and further reduction in the low-rise segment of the Financial District.

• "Less is more” as tenants focus on improved effi ciency and reduced occupancy costs.

• While opportunities for tenants seeking value are still plentiful, rental rates are rising, with the largest percentage change in the Seaport and North Station submarkets.

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Colliers International | p. 3 CONTACT: Mary Sullivan Kelly | [email protected]

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Historical Vacancy & AbsorptionCambridge Office

The vacancy rate in the Cambridge offi ce and lab market increased from 8.9% to 9.8% during the second quarter, as negative absorption in the lab market and a statistically fl at offi ce market contributed to the uptick. The 9.8% vacancy rate still compares favorably with the 10.5% at the beginning of the year as well as the 11.5% rate recorded at this time last year.

The East Cambridge/Kendall Square offi ce market remains extremely tight, with an 8.7% vacancy rate and nearly 250,000 square feet of positive absorption midway through 2013. This submarket continues to be driven by large technology and life science companies who have fl ocked to Kendall Square to compete for talent.

After a strong fi rst quarter, the Cambridge lab market slowed during the second quarter as several blocks of sublease space became available. These subleases, coupled with the availability of two fl oors at 75 Sidney Street currently occupied by AVEO Pharmaceuticals and totaling 55,000 square feet led to approximately 166,000 square feet of negative absorption in the quarter.

Key statistics at the end of the second quarter include:

Market/SubmarketsSupply SF

(000s)

Vacancy

Rate

Absorption (000s)

Q2 2013 YTD

Total Cambridge* 19,856 9.8% (169) 139

Offi ce 10,308 8.8% 60 203

Lab 8,671 11.1% (166) (7)

*Includes R&D space

OFFICE MARKET

The 10.3-million-square-foot Cambridge offi ce market recorded 60,000 square feet of positive absorption during the quarter causing the vacancy rate to decline from 9.4% to 8.8%. This number remains deceptively high for companies looking to open or expand an offi ce in the core Kendall Square submarket which ended the quarter with a vacancy rate of 3%. Given the pending completion of build-to-suit offi ce buildings for Biogen Idec at 225 Binney Street and 17 Cambridge Center, the Cambridge offi ce market is on pace to record at least 700,000 square feet of absorption for the year.Some notable second quarter transactions included HubSpot’s renewal and expansion into 117,000 square feet at 25 First Street. HubSpot, a technology company that creates marketing software, is more than doubling in size from its existing 57,000-square-foot footprint. This lease represents the largest offi ce lease signed in Cambridge in the fi rst half of 2013.

QuickBase, a cloud-based collaboration platform division of fi nancial software giant Intuit, signed a lease for 60,884 square feet at 150 CambridgePark Drive in Cambridge’s Alewife submarket. QuickBase will be relocating its headquarters from Waltham and doubling in size.

NGIN, a start-up incubator signed a lease for 16,000 square feet at BioMed Realty’s 210 Broadway. NGIN Workplace is the latest in a growing shared offi ce space market, competing against the likes of Cambridge Innovation Center, Workbar, Dogpatch Labs, and Geek Offi ces in a growing niche market that serves small users and startups seeking a fl exible alternative to traditional offi ce space. Incubator operators off ering these “co-working” alternatives off er temporary or longer-term options from open shared workspace to private offi ces in spaces ranging from 10,000 to 200,000 square feet.

One noteworthy pending lease is Akamai’s commitment to 50,000 square feet of offi ce space at One Kendall Square Building 600. The Beal Companies has agreed to demolish 50,000 square feet of existing laboratory space in order to accommodate Akamai’s expansion requirement. This commitment is in addition to the 46,000 square feet of expansion space that Akamai leased at 1 Hampshire in the fourth quarter 2012.

Demand remains strong in East Cambridge with 30 requirements totaling over 800,000 square feet, including Facebook (7,000 square feet) and Twitter (35,000 square feet) both looking to open new offi ces in Kendall Square.

The largest offi ce leases executed during the quarter are listed



Cambridge Overview

East Cambridge Office Availabilities

below:

Tenant Address SF

HubSpot (e) 25 First Street 117,000

QuickBase (e) (r) 150 Cambridge Park Drive 61,000

MIT- Sloan School 1 Charles Park 36,000

(e) expansion (r) relocation

Rental rate growth has been most evident in East Cambridge,

with a comparison of current asking rents to 12 and 24 months ago as follows:

Direct Asking Rents PSF

Space Type - Location Q2 2011 Q2 2012 Q2 2013

Class A – East Cambridge $35 - $50 $45 - $65 $48 - $65

Class B – East Cambridge $32 - $37 $38 - $47 $42 - $48

Class A – Alewife $24 - $28 $28 - $35 $30- $40



LAB MARKET

TThe 8.7 million-square-foot lab market closed the quarter with an 11.1% vacancy rate, which compares favorably to the 13.5% vacancy rate twelve months ago and is on par with the 11.0% at the beginning of 2013. Negative absorption during the quarter was attributed to four subleases totaling 160,000 square feet coming back to the market. The largest of these fl our blocks is 75,000 square feet of shell space at 650 East Kendall Street that AVEO Pharmaceuticals place on the market after failing to receive FDA approval for it kidney cancer drug tivozanib. On a positive note, two commitments for subleases totaling approximately 60,000 square feet are already pending.

The largest laboratory lease of the fi rst half was signed during the second quarter by Millennium Pharmaceuticals at Forest City’s 300 Massachusetts Avenue. The 229,000-square-foot build-to-suit will allow Millennium to expand its footprint within University Park at MIT to nearly 800,000 square feet. Construction is expected to begin in early 2014.

Bluebird bio, a clinical staged biotech company focused on gene therapy treatment for orphan diseases, signed a lease for 43,586 square feet at 150 Second Street. Bluebird, initially funded by Third Rock Ventures, also completed a successful IPO during the second quarter. The lease will bring 150 Second Street, speculatively developed by Skanska in 2012, to 85% occupancy.

Sarepta Therapeutics signed a lease for 46,000 square feet of lab and offi ce space at 215 First Street. Sarepta, a RNA-based therapeutics company will move its headquarters from Corvallis, Oregon to Kendall Square.

The largest lab leases executed during the quarter include:

Tenant Address SF

Millennium Pharmaceuticals 300 Massachusetts Avenue 229,000

Sarepta Therapeutics 215 First Street 46,000

bluebird bio 150 Second Street 43,000

There has been a marked decrease in the availability of Class A shell space over the past year. Compared to the second quarter 2012 when 47% of the available space was shell space, 35% of the currently available lab space is in shell condition. There will be an increase in the availability of Class A existing lab in the next year when Vertex vacates approximately 560,000 square feet with its pending move to the Seaport in early 2014 and several other Class A Existing Lab options coming back to the market. Approximately 1.4 million square feet of existing lab space will become available in 2014. The chart below depicts the breakdown of available lab space by type and quality at the end of the second quarter.

Space TypeSF

Available% of Available

Space

#

Buildings

Class A “Biotech-Ready” Shell 340,522 35% 4

Class A Existing Lab 188,056 20% 7

Class B Existing Lab 355,713 37% 18

Obsolete Lab 73,929 8% 2

Totals 958,220 100% 31

Heading into the second half, demand has slowed to 13 requirements totaling approximately 500,000 square feet.

TRENDS

• The Cambridge offi ce market is on track to have a historic high year in terms of absorption. Pending commitments from Akamai, Twitter, Alexion and Facebook as well as Biogen Idec’s upcoming relocation from Weston to Cambridge virtually guarantees a banner second half.

• The spike in offi ce rents has pushed some lab landlords to consider converting lab space into offi ce.

• The vacancy rate in the lab market will spike in 2014 with several large blocks of space set to hit the market.

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Historical Vacancy & AbsorptionCambridge Lab



Cambridge Overview

Fundamentals are trending in the right direction, but the suburban Boston offi ce and R&D markets remain dichotomized. With four of the past fi ve quarters posting positive absorption, vacancies inched down to 19.7% in the second quarter. Tenant demand and leasing velocity remains concentrated in the area’s major offi ce nodes — Route 128 Mass Pike and Northwest and Route 495 West. Some of the smaller suburban submarkets, like Route 495 South, have been gaining ground in recent months as well. Widespread improvements have yet to permeate the Route 128 North and Route 128 South submarkets. Going forward, market conditions should continue to improve, with well positioned, amenity-rich assets and locations garnering the lion’s share of activity.

Aggregate statistics for the offi ce and R&D market are provided below:

Submarket/Class Supply SF (000s) Vacancy RateAbsorption (000s)

Q2 2013 YTD

Suburban Boston 132,728 19.7% 472 591

Inner Suburbs 5,936 12.4% (13) (79)

Route 128 75,847 17.2% 458 308

Route 495 48,929 24.4% 28 308

Worcester 2,015 19.3% (2) 54

SUPPLY AND DEMAND

• The suburban offi ce and R&D market totals nearly 133 million square feet, with performance and product varying from one submarket to the next. Class A properties comprise 30% of the market, with a majority (close to 70%) of this high-end offi ce space located in the Route 128 submarkets.

• The growing tech and biotech industry in greater Boston has been helping to drive the suburban recovery. As such, biotech/pharmaceutical and health care/medical fi rms are among the most active tenants in the suburbs right now. Business service and computer software and service companies also top the list of tenants seeking new offi ce space.

• There are more than 160 tenants, representing roughly 5.3 million square feet with active suburban requirements, and the median size requirement is 12,000 square feet. Just 15 tenants (each needing at least 100,000 square feet) account for more than half of this demand. Some of the more sizeable tenants in the market with potential requirements over the next 12 to 24 months include:

Tenant SF Industry Target Market

Bose Corporation 300,000 Consumer Products & Services

Routes 495 West/Route 495 North

GE Healthcare 250,000 Health Care/Medical Route 495 West

Dunkin Brands 210,000 Consumer Products & Services

Route 128 South/Route 128 Mass Pike

Invensys Systems 200,000 Computer Software & Services

Route 495 South/Route 128 South

Boston Financial Data Services 200,000 Financial Services Route 128 South

VELOCITY

• Leasing activity has held steady in the suburban offi ce market, particularly in the Route 128 Mass Pike and Route 495 West submarkets. Transactions over 100,000 square feet were few and far between in the second quarter, with Trip Advisor’s 280,000-square-foot lease at Center 128 in Needham being one of the largest. Wellington Management's 100,000-square-foot renewal at 100 Campus Drive in Marlborough also topped the list of leases executed in the past three months. However, neither of these transactions contributed to net absorption this quarter, as Trip Advisor’s new headquarters is not yet underway and Wellington’s lease was only a renewal of currently occupied space.

• Companies are more bullish on the suburban submarkets, and recent expansions have bolstered demand for offi ce space. As previously discussed, Trip Advisor’s lease at Center 128 will more than double the size of the company’s current space in Newton. Implant Sciences also more than doubled its headquarters and will be relocating from 23,000 square feet at 600 Research Drive to 58,000 square feet at 500 Research Drive, Wilmington. Finally, Shire Pharmaceuticals expanded its footprint by close to 56,000 square feet by subleasing space at 100 Hayden Avenue, Lexington from AMAG Pharmaceuticals. AMAG went on to lease 32,000 square feet from Boston Properties at the Bay Colony Corporate Center. Landlords can expect to see suburban Boston absorption increase in the coming quarters, as businesses remain optimistic about market conditions.



Suburban Overview

• Year-to-date, the Route 495 submarket has seen solid leasing activity and absorption. Tenants have been most active in Route 495 West, but Route 495 South has recently garnered some attention. In fact, Bridgemedica leased more than 41,000 square feet at 111 Forbes Boulevard, Mansfi eld, and New England Controls inked a deal for 34,500 square feet at 21 Oxford Road, Mansfi eld. With such positive momentum and ample available space, fi rms will be more likely to give this submarket a second look in the coming quarters. In Route 495 North, however, the market is still precarious. Despite large leases executed by Telefl ex Medical and Implant Sciences and Verizon’s expansion at Cross Point III in Lowell, absorption is still in the red. Both Enterasys and MetLife vacated more than 200,000 square feet combined in Andover and Lowell, respectively.

Some of the larger transactions executed during the quarter included:

Tenant Address SF

Trip Advisor (e) Center 128, Needham 280,000

Wellington Management (r) 100 Campus Drive, Marlborough 100,000

Telefl ex Medical 16 Elizabeth Drive, Chelmsford 94,000

ConVerge Diagnostic Services 4 Technology Drive, Peabody 72,000

Compuware 404 Wyman Street, Waltham 68,145

Implant Sciences (e) 500 Research Drive, Wilmington 58,345

Shire Pharmaceuticals (e) 100 Hayden Avenue, Lexington 55,924

(r) renewal (e) expansion

ABSORPTION AND VACANCY

• Through the second quarter, the suburban offi ce and R&D markets have realized close to 600,000 square feet of absorption, which is on pace to surpass last year’s total of nearly one million square feet. This positive movement has allowed vacancies to inch down toward 2008 levels, ending the second quarter at just 19.7%. Given the momentum in the market, continued recovery is expected in the coming quarters.

• On the whole, the Route 128 submarkets have seen a rather pedestrian recovery thus far, with little vacancy movement over the past year. However, there is still some push and pull in the market — with pockets of strong leasing mitigating area weaknesses. Tenants have been laser-focused on Waltham and Burlington, which has resulted in a full percentage point decline in vacancies in both towns over the past year. Keurig’s expansion at 63 South Avenue, Burlington (50,000 square feet) and AMAG Pharmaceuticals’ lease at 1100 Winter Street, Waltham (32,200 square feet) contributed to this recent growth.

• Though still tracking well above the suburban Boston average, vacancies have been declining at a steady clip in the Route 495 submarkets over the past year. In fact, rates are tracking below 25%, which is in line with 2009 levels. A handful of mid-sized transactions took place in the Route 495 South submarket, helping to push vacancies here below 20% for the fi rst time since 2008. Despite some good leasing activity in Wilmington, the vacancy rate in the Route 495 North submarket has seen little movement in the past two years.

Suburban Overview

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OFFICE RENTAL RATES

• Weighted average asking rents for Class A offi ce range from just above $18 per square foot in the Route 495 North submarket to $30-$31 per square foot in the 128 Mass Pike and Inner Suburban submarkets. Asking rents have inched higher in recent quarters, with outsized gains occurring in the Route 128 Mass Pike, Inner Suburbs, and Route 495 West submarkets.

• Despite posting modest vacancy declines over the past year, average offi ce rents in the suburban market are generally fl at. But there are pockets of growth. Recent leasing proposals at select properties have been aggressively quoted, and certain segments of the market are seeing signs of improvement with lease rates in Needham, Waltham, and Wellesley in the high $30’s to low $40’s per square foot.

TRENDS

• With more than 60% of the metro’s offi ce inventory located in the suburbs, the vacancy rate is slower to move than the Boston or Cambridge markets, and is expected to decline marginally in the coming quarters.

• Tenant growth and expansion have taken hold. Look for more relocations and expansion in the core Route 128 Mass Pike submarket. The recovery in less central locations will continue to lag behind.

• Select Class A, amenity-rich buildings located along the stretch from Burlington to Needham have been the fi rst to realize rental growth. Rents for new and premier Class A buildings in these locations should see more upward momentum this year.

• In addition to the economics of rent per square foot, tenants seek value through effi ciency, amenities and sustainability.



Greater Boston continues to be a sought-after investment market, generally characterized by an over-supply of buyers, an under-supply of attractive investment opportunities and accelerating asset pricing. Many institutional investors are having diffi culty deploying capital and fi nd themselves “yield starved” in the current low interest rate environment. Core offi ce buyers previously focused exclusively on the CBD have moved boldly into the suburbs, lured by a perceived yield premium and an abundance of off erings. Fueled by improving leasing fundamentals in the best-performing submarkets, owners of top-tier suburban offi ce properties are looking to exploit market timing and achieve premium pricing. The decline in sale volume in the CBD offi ce sector is not for lack of interested buyers, but rather is due to a dearth of would-be sellers. Ownership of much of Boston’s tower market is concentrated among long-term holders (Boston Properties, TIAA-CREF) or is part of a potential portfolio play (Equity Offi ce). In addition, rising rents are enticing owners to wait for income growth at lease roll over before selling. Interest rates inched upward and the 10-year Treasury yield increased 66 basis points over the course of the second quarter. Market watchers are closely monitoring the impact this will have on lending rates and equity return hurdles.

During the fi rst half of 2013, Greater Boston registered an aggregate sales volume of $2.2 billion among the four major asset classes (offi ce, industrial, retail, multifamily). This dollar amount is on track to come in slightly behind 2012’s aggregated total of $4.5 billion. The major story is the dramatic increase in the volume of suburban offi ce transactions. In the fi rst half of 2013 suburban offi ce sales totaled $1.14 billion; well on its way to eclipse 2012’s annual total of $1.41 billion. In regard to the other asset classes, CBD offi ce is trailing 2012 sales volume, while industrial, retail, and multifamily sales are on par.

BOSTON CBD

Two institutional investors made major headlines in the second quarter of 2013, with TIAA-CREF acquiring the stabilized 40 Broad Street from Pearlmark Real Estate for $388 per square foot and a sub-5% cap rate, and Deutsche Asset & Wealth Management paying $305 per foot for the nearly vacant 45 Milk Street. In other news, a joint venture of Synergy Investments and Divco West purchased three buildings and a parking garage in the Fort Point District from the Archon Group. The in-place cash fl ow of the 657-space parking garage will provide a solid revenue stream as the venture leases up the remaining offi ce space. Selected transactions include:

Address Buyer Seller Price SF $/SF

40 Broad Street TIAA-CREF Pearlmark Real Estate Partners $110,000,000 283,000 $388

Seaport Wharf Portfolio Synergy Investment & Development JV Divco West Archon Group $53,000,000* 339,497*

45 Milk Street Deutsch Asset & Wealth Management Anglo-Irish $21,000,000 68,829 $305

628-636 Washington Street Washington Liberty LLC LNR Partners $8,137,500 44,011 $185

*includes parking garage

CAMBRIDGE

In sought-after Cambridge BioMed Realty Trust expanded its Cambridge footprint with the purchase of 320 Charles Street for $52 million or $523/SF. The property is fully leased to the Whitehead Institute for BioMedical Research. Alewife was a benefactor of intensifying investor interest in Cambridge as Synergy sold 10 Fawcett Street to Griffi th Properties. With Red Line access and well over 1,000 residential units either permitted or under construction, Alewife is becoming a live/work/play alternative to Kendall Square.


Broad Institute 320 Charles Street BioMed Realty Trust Private investment group $52,000,000 99,500 $523

39 JFK Street Morningside Group Delta Properties $33,100,000 26,250 $1,261

10 Fawcett Street Griffi th Properties Synergy Investment & Development $31,300,000 130,304 $240

SUBURBS

There were many opportunities in the second quarter with assets that had both in-place cash fl ow as well as value-add components. Charles River Realty and National Development paid $216,000,000 and a reported 6.3% cap rate for a stable ten-building offi ce portfolio

Capital Markets



in Burlington that included additional in-place development rights to further increase their returns. Rockwood Capital purchased Waltham Place, 73% leased, and a reported 6.4% cap rate, with the goal of leasing it up at market and raise returns well above eight percent. In Quincy, Campanelli and Trigate Capital purchased the vacant Heritage Landing buildings for $46 per square foot, well below the estimated replacement cost of $300 per foot. Offi ce transactions include:


New England Executive Park, Burlington Charles River Realty/National Development JV Blackstone $216,000,000 1,032,209 $209

Riverside Center, Newton Hines Global REIT, Inc. Blackstone $197,250,000 510,000 $387

Arsenal on the Charles, Watertown AthenaHealth Harvard University $168,500,000 768,133 $219

266 and 275 Second Avenue, Waltham Rockwood Capital/Griffi th John Hancock Life Insurance $34,500,000 201,565 $171

275 Washington Street, Newton Taurus Investments TA Associates $34,000,000 172,179 $197

Industrial sales volume was just shy of fi rst quarter totals and is on par with 2012. Selected industrial sales include:


175 Kenneth Welch Drive, Lakeville AR Capital Sycamore Partners $36,743,057 555,695 $66

1 Investors Way, Norwood US Realty Advisors The Davis Companies JV Marcus Partners $32,300,000 242,189 $133

300 Riverpark Drive, Reading Tritower Financial Group JV Cresset Partners Taurus Investments $32,250,000 208,921 $154

MULTIFAMILY

With ample capital looking to invest in Boston and the limited supply of core assets, owners in secondary markets see this as an opportune time for listing multifamily assets. Over the next 24 months, there will be signifi cant new supply coming online and it has yet to be determined how this might aff ect returns for existing multifamily product.

Address Buyer Seller Price Units $/Unit

Douglass Park Apartments 650 Columbus Avenue, Roxbury The Hamilton Company Douglas Plaza Housing $52,000,000 122 $426,320

Old Colony Lane 60 Pleasant St. & 1-17 Old Colony Lane, Arlington Old Colony Realty Partners/Andre Danesh David Wilfert Trust $32,400,000 250 $129,600

Edmunds House Apartments 15 Edmunds Road, Framingham Beacon Communities Edmunds House Apartments

Association $22,000,000 190 $115,789

RETAIL

Novaya Ventures and Urban Meritage were active in the second quarter, staying true to their strategy of investing in Newbury Street retail. Purchasing 8, 79, and 205 Newbury Street gives the joint venture a strong presence from Arlington to Fairfi eld Streets. Given steadily improved consumer confi dence and with it, consumer spending, retailers on both Newbury Street and “Main Street” will recognize increased rents and returns.

The focus in suburban retail transactions remains on anchor-credit tenants over local, suburban retailers. As fundamentals improve and competition tightens, the market will determine how willing retail investors will be to move up the risk curve to riskier tenants and riskier locations. Selected transactions include:


The Mall at Whitney Field100 Commercial Street, Leominster Vintage Real Estate LLC U.S. Bank $36,100,000 636,526 $57

Newbury Street Portfolio, Boston Novaya Ventures JV Urban Meritage Various $33,210,000 34,126 $973

Riverway Plaza 729 Bridge Street, Weymouth CBRE Global Investors Samuels & Associates $21,500,000 249,447 $86

400 Presidential Way, Woburn Realty Income Corporation National Development $21,100,000 32,500 $649



Colliers International

160 Federal Street

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MARKET SQUARE FEET (SF) SUPPLY

DIRECT SFAVAILABLE

SUBLEASE SFAVAILABLE VACANCY* Q2 2013

ABSORPTIONYTD

ABSORPTION

BOSTON 60,911,211 6,814,929 751,442 12.4% 138,299 434,833

Back Bay 12,171,940 973,070 211,997 9.7% 137,521 55,717

Financial District 33,591,139 4,571,554 375,418 14.7% (126,848) 151,489

Charlestown 2,843,898 273,562 15,800 10.2% 46,267 53,550

Crosstown 1,025,000 22,000 3,453 2.5% (7,000) 16,547

Fenway/Kenmore 1,826,057 129,110 0 7.1% 4,700 (1,799)

North Station 1,863,372 127,375 5,000 7.1% 107,442 36,716

Seaport 6,405,788 579,473 119,936 10.9% (41,979) 83,145

South Station 1,184,017 138,785 19,838 13.4% 18,196 39,468

CAMBRIDGE 19,855,661 1,551,964 390,411 9.8% (169,486) 138,895

Alewife Station/Route 2 2,756,490 317,915 102,442 15.2% (103,446) (123,141)

East Cambridge 15,173,025 1,180,145 287,969 9.7% (62,540) 216,131

Harvard Square/Mass Ave 1,926,146 53,904 0 2.8% (3,500) 45,905

SUBURBS 132,727,539 23,344,466 2,815,763 19.7% 471,779 590,750

Inner Suburbs 5,936,062 647,498 89,459 12.4% (13,095) (78,943)

Route 128 North 8,276,548 1,496,425 153,111 19.9% (70,621) (195,552)

Route 128 Northwest 22,733,308 2,951,455 611,005 15.7% 209,795 (86,685)

Route 128 Mass Pike 29,401,344 3,804,300 816,108 15.7% 289,707 492,509

Route 128 South 15,436,071 3,142,126 105,592 21.0% 29,289 97,666

Route 495 North 25,982,086 5,868,362 321,545 23.8% (17,117) (185,589)

Route 495 West 18,347,382 4,292,208 627,015 26.8% (68,388) 387,619

Route 495 South 4,599,604 785,516 58,981 18.4% 113,732 106,139

Worcester 2,015,134 356,576 32,947 19.3% (1,523) 53,586

TOTAL 213,494,411 31,711,359 3,957,616 16.7% 440,592 1,164,478

*Including sublease space

Q2 2013 STATISTICS | OFFICE/R&D

Market Snapshot

Documents

GREATER BOSTON MARKET VIEWPOINTMidway through 2013, the vacancy rate in the Boston offi ce market is 12.4%, compared to 13.0% at the beginning of the year and 14.5% twelve months ago