Senné's 2022 Residential & Commercial Real Estate Outlook in Greater Boston
Leading real estate investment and advisory firm Senné, with offices in Boston, Cambridge and New York, was the #1 independent brokerage in Cambridge in 2021 and one of the top 100 brokerages in the Greater Boston market. Here are some key predictions for 2022 that can be attributed to Senné and we are also happy to line up interviews. We can provide more information and stats upon request as well.
- On the residential side – it goes without saying that 2021 was an exceptionally hot sellers’ market; as you’ll see in the Senné 2021 Year in Review, the average sales price for Senné developments alone was $1.84M. And as of November 2021, prices for single-family homes were up across Boston, Cambridge, Somerville and Arlington.
- Cambridge has typically seen some of the highest home prices in the Boston area throughout 2021 – the average list price in November 2021 was over $3.4M.
- According to Hauser, the market doesn’t show any signs of cooling off as we head into 2022. Prices have been slightly lower than their peak in 2021 and inventory seems to be increasing, but just slightly.
- It continues to be a sellers’ market in most sectors. It’s too early to tell how inflation and rising interest rates will affect affordability but Senné keeps a close eye on the indicators to stay ahead of the curve.
- Mortgage rates catered to buyers in 2021 but will likely rise in 2022. It’s too early to predict how high they will go. We may see them rise a point during the course of the year.
- In 2022, the surrounding areas outside of Boston that are anticipated to be most popular are the North Shore within 20 miles, Worcester, and the MetroWest, especially as work from home continues, at least part time. The Cape remains very competitive as does Middlesex County.
- Within the city, Beacon Hill and Back Bay still remain the strongest neighborhoods.
- Yes, it’s been a sellers’ market, but buyers will have some advantages over 2021 in areas where the inventory has begun to soften. However, it’s not a buyer’s market by a long shot so consumers need to have their finances all buttoned up, know what they can afford, get prequalified, be cautious before making any large purchases when looking to finance a home purchase, and work with a local expert.
- Buyers should expect to be involved in bidding wars even as we enter 2022.
- Not ready to buy? For the renters out there… the rental market in Boston is very high, currently third in cost behind New York and San Francisco. The vacancy rate is very low and the demand is there.
- Private rooms to use as “home offices” remain popular in rentals, as do in-house fitness centers, dog grooming rooms and common areas with lounges, pools and entertaining spaces.
- And as the work-from-home trend continues, we will look to see changes in how office space is used and how it could be converted into residential or mixed use. That will continue to transform.
- On the commercial front, in Boston, we have seen the unemployment rate significantly decrease but it remains to be seen what this hiring impact will have on office owners.
- On the positive side, available sublease continues to decrease and there has been a modest uptick in office leasing activity and rents so we'll just have to wait and see what the return to normal will ultimately look like.
- No matter what, space requirements will definitely differ in the future. Shared space, or hoteling, will likely grow in popularity enabling companies to reduce overhead by leasing less space.
- The downside will be less personalized space for the worker that generally made them feel more comfortable in the past (no pictures or personal mementos.) Quality of space will be more important than quantity.
- Unlike office space, there has been explosive demand for warehouse and distribution space. For the first time in history the vacancy rate in the Greater Boston market has dipped below 2.0%.
- Warehouse development will increase in the suburbs for last mile delivery and more available development sites that are in close proximity to major highways.
- Another sector in the Boston marketplace that has seen significant growth has been Life Science and demand will likely not be satisfied for some time to come.
- We are seeing significant activity in Boston, Cambridge, Watertown and Waltham within the lab space sector. Although Cambridge is the preferred location due to proximity to MIT and Harvard, there is limited available space which will push development to other areas within the Route 128 belt.
- The suburbs, historically driven by tech companies, have large blocks of vacant space which will likely persist until companies begin to return to the office.
- In contrast, certain markets such as the 128/Mass Pike submarket have done well over the last year or so as companies like Partners Healthcare, Microsoft and Oracle continue to grow and lease more space.