by Julianne Hester, Account Executive
As we ring in 2023, it’s only natural to look ahead at the coming year. In 2022, commercial real estate in Boston saw many changes, impacted by a turbulent economy and a new mayor. A year into Mayor Wu’s term, we’re seeing how her policies are beginning to shape the real estate environment in Boston. And with the recent inauguration of Gov. Healey and Lt. Gov. Driscoll, the coming year will be marked by new policy and leadership in the industry. Reshaped by the pandemic, these are the trends in real estate we’re watching in 2023.
Affordable Housing
While Boston is in the midst of a homelessness and housing crisis, affordable housing is top of mind this year. Announced in December, Mayor Wu’s new housing affordability plan proposes changes to both the Inclusionary Development Policy (IDP) and the commercial Linkage Policy.
These changes are set to go before the Boston Planning & Development Agency (BPDA) and Zoning Commission later this month. The IDP changes must also pass a City Council vote to be approved.
The proposal underscores Mayor Wu’s commitment to affordable housing in Boston, and while these changes are not approved, we can expect the Wu administration to continue to be focused on affordable housing in the year to come.
Meanwhile, at the state level, Governor Healey has begun the search for the state’s housing secretary. As housing is a top priority for the administration, we expect to see a great deal of relevant news in months to come.
Office Conversions
As Massachusetts faces a housing crisis, and Boston office vacancy rates are at their highest in over a decade, the BPDA is exploring the possibility of converting downtown office spaces for residential use.
While early independent reports indicate that conversions may not be a large-scale, viable solution, the BPDA has hired H&RA Advisors to conduct a study on which buildings are eligible for conversions. While the floorplans of existing office buildings may offer limitations to traditionally designed apartments, we can expect some creative solutions in the new year to add housing to downtown Boston.
Decline in Lab Construction
With Boston and Cambridge at the forefront of the biotech industry, which grew at a rapid rate during the pandemic, lab construction in the region and surrounding suburbs has been booming in recent years. Once focused around Boston and Cambridge, we’ve seen expansion to Watertown, Waltham, Somerville, and along the Mass Pike.
As the biotech industry overall cools in 2023, lab demand and construction will naturally follow suit. Additionally, labs are incredibly expensive to build, and as supply chain and increased costs continue to affect construction, we can expect continued lab construction, but at a slower pace than in recent years.
Downtown Revitalization Program
Finally, an initiative near and dear to our hearts at IMG, with our HQ at 30 Winter Street in Downtown Boston, is the downtown revitalization program.
Last year, the Wu administration announced a downtown revitalization plan, which outlined a multi-strategy plan to boost the neighborhood following the pandemic. While the planning initiative to convert office space to housing may be less feasible than hoped, a program announced in December seeks to fill empty storefronts.
Amid rising vacancy rates in retail and office space, the SPACE program (Supporting Pandemic Effected Community Enterprises) looks to fill vacant retail space with small businesses, prioritizing industries most affected by the pandemic. We look forward to having some new neighbors around our office!