Framingham Commercial Real Estate Market Update
If you're looking for information about commercial real estate in Framingham, MA, Boston City Properties has you covered. Currently, Framingham and Natick are experiencing upticks in certain commercial real estate sectors. In particular, life science development has taken hold in the region, fueling speculation that MetroWest could soon become yet another burgeoning life science hub. At the same time, the region's office space market has held surprisingly steady in the wake of the COVID-19 pandemic, and conversions across the area – particularly of retail space into office and lab space – are trending upward.
In the years leading up to the start of the pandemic, Framingham and Natick, which are often grouped separately from the rest of the MetroWest region, had seen growing interest from office tenants. The area's office vacancy rate decreased slowly but steadily, signaling that tenants may have been moving outward into the region for its affordability and other factors. Meanwhile, though, the rest of the MetroWest region had seen climbing office vacancy rates.
When the pandemic struck in early 2020, many projects were put on hold. However, there were some exceptions. For example, in September, an office building at 40 Cochituate Road sold for $12.4 million. The deal, which closed on August 24, is significant because it originated before the pandemic. The fact that it was still completed is important and suggests that the area's office market is more robust than expected. At $291 per square foot, the sale bodes well for the value of other office properties around the MetroWest region.
Together with Natick, Framingham had around 8.4 million square feet of Class A and Class B office space at the end of the fourth quarter of 2020. At the time, the average gross rent per square foot stood at around $24. The city's office vacancy rate dropped by 1.1% from 2019 to 2020, ending up at 11.5% for the year. Subleases totaling around 121,500 square feet accounted for approximately 1.4% of the vacant space.
One exciting trend that is happening in Framingham right now is a move from Class B up to Class A space by many major tenants. It appears that many are willing to upgrade to the better space because the price jump isn't too significant. Lately, you can acquire Class B office space in this part of MetroWest for between $24 and $26 per square foot. Meanwhile, Class A space is available starting at around $30 per square foot. Another reason for this trend could be that some Class B space is being targeted for conversion, making Class A space more attractive.
Perhaps the most exciting development in the world of Framingham commercial real estate is its burgeoning life science market. In late 2020, King Street Properties, one of the largest lab space owners in the country, sold a portfolio of three Framingham life science buildings to Oxford Property Group of Canada for $153 million, or $537 per square foot. The buildings were acquired by King Street in 2018, and the developer and its partners performed upgrades, conversions and expansions on much of the space. If the converted space attracts tenants quickly, Framingham could be well-positioned to expand its life science prominence in the near future.
Finally, another trend affecting Framingham commercial real estate is converting large retail properties into office, industrial or life science space. A great example of this is found in nearby Natick, where Hudson Bay plans to convert the former Lord & Taylor store at Natick Mall into 115,000 square feet of high-amenity office, co-working and maybe even life science space. The developer's "York Factory" concept of developing innovative office space environments that tap into mall amenities is being tested out in this market, and it will be interesting to see how things go. The former store's gutting is expected to start in the first quarter of 2021, and the developer is still searching for an anchor tenant for the site.