EDR Insight Releases Market Confidence Index for BOSTON

85% of local due diligence consultants characterize Boston as a flat to moderately growing market that is drawing high interest from foreign investors.

As part of this fall’s Due Diligence at Dawn tour, EDR Insight is compiling an Environmental Due Diligence Market Confidence Index that characterizes each metro’s state of the market, risk tolerance, top challenges and near-term forecast.

We hosted our Due Diligence at Dawn workshop in Waltham on November 16, and highlights on what makes the Boston due diligence market unique included:

  • The metro was just ranked as 12th metro overall in the U.S. for investment and development in 2017 in the Urban Land Institute/PricewaterhouseCoopers Emerging Trends in Commercial Real Estate report—as well as the number-one market for hotel investment.
  • Major port cities like Boston, LA, Chicago and northern New Jersey, benefit from demand for industrial properties, which are highly coveted, even in a downturn.
  • Boston is behind only New York City and San Francisco in terms of foreign investment in real estate.

    “In a knowledge-based economy, investors really like to stay in the brain hub markets like Boston.”

  • Growing industries such as technology, financial, and health care services are the key job creators in Boston.

These positive trends support what the EDR ScoreKeeper 3Q16 report show for Boston in the latest quarter: Phase I ESA activity in the Boston MSA was up 2 percent over last year’s third quarter, while nearby Providence fell by 4 percent over the same time period. Total Phase I ESA volume in Massachusetts increased by five percent in the first three quarters of 2016 over 2015, outperforming growth rates for the U.S. market and most other states.

The results of our Boston Market Confidence Survey, conducted the week prior to DDD characterize the market as follows:

  • 44 percent of area EPs are experiencing a growth market in Boston, while another 41 percent characterize it as plateauing.

“Seems to be leveling out a bit based on past years.”

  • Commercial real estate lenders and investors remain risk averse.
  • Clients are extremely sensitive to Phase I ESA pricing and turnaround time.
  • Pricing pressure, finding new business and intense competition are today’s top challenges.
  • Consultants are cautious about Boston’s outlook, ranking it a 2.8 on a scale from 1=very pessimistic to 5=very optimistic.

BostonMarket-InfoGraphic-doublewide

EDR Insight would like to thank all of our Boston area consultants who participated in the survey.

Next week, we will be visiting the West Coast so if you work in the Irvine, Oakland or Seattle areas, sign up for DDD here. The Market Confidence Index for our last three cities will be published by the end of the month.