Boston retail space is now as hot as Miami and Raleigh

The competition in the Boston retail real estate market is getting tighter.

The retail vacancy rate this quarter in Beantown is 2.9 percent, according to Bisnow. 

A recent Marcus & Millichap report found that Boston’s retail vacancy rate matches those of Miami and Raleigh, the lowest rate in the nation among the 50 metros tracked.

Boston’s retail vacancy rate has been steadily declining every year since the start of the pandemic. This may be tied to low supply; there were fewer than 260,000 square feet in the metro’s construction pipeline at the year’s start. The average asking rent, meanwhile, is up to $21.85 per square foot.

“It has one of the highest area median incomes of all metros throughout the country, but it’s not heavily supplied in retail,” Marcus & Millichap’s Tom Shihadeh told the publication. Shihadeh added that major shopping hubs such as Newbury Street and the Prudential Center continue to perform well, forming one of the “most uniquely insulated retail pockets throughout the entire country.”

Tenant demand is increasing in the suburbs too, Shihadeh said.

There is at least one interesting new retail project in the pipeline, revealed just this week. A plaza is being planned in Back Bay right above the Massachusetts Turnpike, CBS Boston reported. In addition to stores, some of which are expected to open in the fall — tenants already in place include electric vehicle maker Rivian — the development will include housing, restaurants, a hotel and green space.

Boston is also an emerging hub for experiential retail, as businesses try to pull out all the stops to get customers in their stores. Dick’s Sporting Goods, for instance, is working on a 118,000-square-foot store in Back Bay that will include a rock climbing wall and batting cage.

— Holden Walter-Warner

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