Writer: Esteban Pages
3 min read May 2023 — In a real estate consolidation move mirroring Greater Boston’s office market, the University of Massachusetts system (UMass) recently concluded the relocation of the systemwide president’s office operations from Shrewsbury to Westborough.
The move cuts the president’s office footprint from about 103,000 square feet in Shrewsbury’s South Street Campus to 48,000 square feet; a 53% reduction in office space. The original space also accommodated UMass information services and human resources offices as well as administration offices for the UMass Chan Medical School in Worcester, according to Boston Business Journal. Despite the downsizing, the lease ranks high among the larger office deals of 2023, according to commercial real estate agency JLL.
The new building is LEED Silver certified, aligning with the university’s strong push toward sustainability. Amenities include a grand sky-lit lobby, full-service cafeteria, a fitness center, loading docks, a large parking space and a roof-top solar array. According to Alison Powers, Executive Vice President at JLL, the building’s “strategic location between two major economic hubs, Boston and Worcester, and other more unique aspects like the access to outdoor trails, is what more tenants are ultimately looking for to meet their organizational needs while prioritizing that of the employees too,” as cited by Boston Real Estate Times.
The relocation comes at a time when Greater Boston’s office market is still adapting to the work-from-home hybrid environment. Most employers are rethinking the way they use their office space from both a cost standpoint and to better meet their workforce needs and retain talent. According to Avison Young’s 1Q23 Greater Boston office market report, there was a negative net absorption of 900,244 square feet in office space, the third-lowest absorption in the area since 2013. The total vacancy rate stood at 12.9%, the highest it has been in the last 10 years. Office space subleases are on the rise, with the report mentioning the outstanding ones include household names such as Verizon, Akamai, Salesforce and Bose. In tandem, average asking rents saw a slight dip to $49.85 per square foot, with the suburbs showcasing a wider decrease of 250 basis points from 4Q22 to $27.40 per square foot, while Boston and Cambridge rents only decreased by 120 basis points to $64.90.
On a more positive note, an additional 5.4 msf of ground-up construction is currently under development and 45% pre-leased. However, the new office space supply is concentrated in Boston’s CBD area. Banking, finance, insurance, real estate and tech firms are leading the ground-up construction pre-leasing.
Another encouraging metric for Greater Boston’s office landscape is job postings. Remote roles compared to total job postings amounted to 14.2% quarter-to-date in 2023, a 1.8% drop compared to the all-time high of 16% reached in 2021. Non-remote and hybrid postings make up the remaining 85.8%, signaling a preference for in-office work in Greater Boston driven by employer’s right-sizing efforts and increasing workplace utilization.
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