- Essex and Middlesex counties represented 49% ($152M) of Massachusetts' Q1 2019 commercial real estate transactions, though sales were down 21 transactions, $88M, and 850K SF compared to Q1 2018. Average price per square foot also decreased $86. - Industrial and flex properties have strong demand but limited inventory, with vacancies low and rents at an all-time high. Office usage is changing as companies relocate to suburbs but still demand amenities. Retail leads sales but average price per square foot fell 40% and vacancies are rising. - Opportunity Zones have increased available properties by 73% within the counties, with asking prices up 271% on average. Haverhill and

1. Q1 2019 MARKET REPORT

2. INDUSTRIAL - 17.7%
OFFICE - 33.7%
FLEX - 9.9%
RETAIL - 38.7%
The following analysis incorporates data from
Essex, Middlesex, and Rockingham counties,
focusing on sales between $1-10M of office,
industrial, flex and retail properties.
CURRENTLY ON THE MARKET: Q1 2019

3. In the first quarter of 2019, 49% of transactions in the state of
Massachusetts took place in Essex or Middlesex county. These two counties
accounted for $152M of the $351M in 2019 first-quarter sales. Heading into
2019, our forecast projected a mild slowdown in market and that has proven
to be true. Compared to this time last year, Q1 2019 sales are behind by 21
transactions, $88M in sales volume, and 850,000 SF of inventory. While the
market has experienced fewer sales overall, the average price per square foot
has also decreased by $86 SF.
Buyers of commercial property in Essex, Middlesex or Rockingham county
continue to be “local,” with 84.2% of buyers living in Massachusetts or
New Hampshire. Of the 15.8% of buyers who were from out of state, 80% of
them purchased either a bulk portfolio or a specialty property. This indicates
that out-of-state buyers in these counties seem to look for efficiency of
scale in this price range, which explains their bulk purchasing beha­vior.
In a survey of local CRE investors, 66% of respondents said they plan to
increase their capital commitment to CRE over the next 18 months.
Our data says that investors are not heavily interested in adding income-
focused properties to their portfolio this year. Although long term triple-net
(NNN) investments are often the most sought after in mature markets,
popular opinion for 2019 is that a more aggressive strategy such as
value-add or opportunistic investments will be favorable for investors.
A full 89% of investors believe interest rates and property type will be the
biggest disruptors of cap rates. More than half of investors foresee cap rates
remaining the same in 2019, while 33% believe cap rates will rise. Nearly
70% of investors reported they would be less likely to buy commercial
property if interest rates were to drastically rise, while 22% said it would
not have any impact on their purchasing behavior. This would likely mean
they would wait for pricing to adjust to a higher interest rate lending
environment before making additional acquisitions.decrease in average price/SF
ESSEX AND MIDDLESEX COUNTIES
REPRESENT HALF OF THE STATE’S
TRANSACTIONS AS MARKET SLOWS
21fewer transactions
Q1 2018
Q1 2019
COMPARED TO
$88M
less sales volume
850Kfewer SF of inventory
$86decrease in
average price/SF

4. INDUSTRIAL/FLEX PROPERTIES: STRONG DEMAND
Due to a lack of inventory, sales volume of industrial and flex properties is down
47%. Only 10% of properties currently on the market are flex and 18% are industrial.
While inventory is scarce, demand remains strong.
Those purchasing flex properties are pursuing larger building footprints than they
were last year. Of the flex buildings sold YTD 2019, the average building square
footage has increased by 35% from 2018. Vacancies are at a low, and rents are at
an all-time high, up 7% from last year alone.
Combining warehouse and office space provides flexibility for the employer while
reducing costs. While e-commerce continues to boom, demand for industrial and flex
properties is prevalent.
When we surveyed investors regarding rent growth predictions, 56% believed
industrial would have the largest increase in rent growth this year, while 22% favored
retail and 22% favored office. When analyzing industrial properties sold YTD 2019,
57% of them were warehouse, 29% are manufacturing, and 14% are R&D. Industrial
properties in 2019 are selling for roughly 2.25 times their assessed value.
35%increase in average
square footage of
flex buildings sold
(compared to 2018)
SOLD BY MANSARD

5. OFFICE PROPERTIES: CHANGING USAGE
As office rents in major cities continue to rise, many corporations are choosing to
relocate their business to the suburban markets. Although they are willing to stray
from a prime location, they are not willing to give up the Class A amenities, which
may become a problem for some landlords.
One-third of our investors recognized office buildings as a high-risk investment in
2019, but for the right investor they can be quite rewarding. Office buildings are one
of the most volatile commercial properties. They are closely tied to many factors,
such as the economy, job growth, nearby market supply and ever-changing tenant
needs. There are currently 3.5M SF of new office buildings under construction in the
three counties. Office buildings in Essex, Middlesex and Rockingham counties carry a
vacancy rate of 8.5%, while the average vacancy rate is 5.4% among other
property types. The office market will continue to see tremendous changes as
occupiers change the way they use office space.
Data has shown that occupiers are purchasing smaller office buildings in 2019 by an
average of 14,000 SF. Last year at this time, 810,000 SF of office space was
acquired, compared to just 101,087 SF this quarter in the three counties. Studies
have shown that the number of working millennials will soon represent 75% of the
global workforce and 92% of millennials prefer to work remotely. Additionally, the
number of coworking employees is projected to increase by 25% in 2022. While
users can benefit from the lower cost of rent, landlords have the opportunity to earn
more revenue than they would renting to a single tenant. Not only can the coworking
concept be recession proof, landlords will worry less about having a large vacancy
in their building. The combination of these changes is more than enough to create a
major shift in the market. For office buildings to successfully transition into a
coworking space, they will require a greater range of amenities, high class
contemporary design, and advanced smart technology. Landlords investing in this
new trend are seeing better tenant retention, higher net operating incomes and
increased property values.
810,000
LAST YEAR
AT THIS TIME
SF of office space
was acquired
compared to just
101,087
this quarter in the
three counties
SOLD BY MANSARD

6. RETAIL PROPERTIES: LEADING SALES
While some commercial property owners have concerns of retail becoming obsolete,
retail has been the most popular asset type among investors thus far in 2019.
Of all the properties sold so far in 2019, 46% were retail, up from 37% in 2018.
The average price per square foot for retail properties sold year-to-date has fallen
by 40% from last year.
Two-thirds of investors believe retail properties are the highest-risk investment of
2019. Investors looking for higher-risk investment are in luck, as retail properties
account for 39% of properties for sale in the market today. We perceive investors
to be pursuing a higher amount of value add and opportunistic investments in 2019,
which aligns with retail seeing such a high transaction volume this year.
In Essex, Middlesex and Rockingham counties, 35% of retail properties currently on
the market are completely vacant, while 42% are fully occupied. Of the remaining
retail properties for currently for sale, roughly half are at 80% occupancy.
As retail reaches the hyper-supply phase in the market cycle we can expect to see
more vacancies, pushing landlords and investors to strategically innovate. We
anticipate seeing more big box retail properties converted into health facilities,
fitness centers, warehouses and pop-up stores. Landlords, investors and developers
will have plenty of opportunities to creatively overcome the abundance of these
properties. We see retail properties offering services and experiences leading the
way in the investment sales market. Whether that means converting to mixed use,
obtaining a stronger tenant mix, or redevelopment, retail will never be irrelevant.
At this time last year, 590,000 SF of retail properties had transacted, compared to
only 373,937 SF this year. Although retail is slightly behind in sales compared to last
year, it’s evident that the retail sector continues to thrive.
35%of retail properties
on the market
are completely
vacant while
IN ESSEX,
MIDDLESEX AND
ROCKINGHAM
COUNTIES
42%are fully occupied
SOLD BY MANSARD

7. OPPORTUNITY ZONES: INFLUX OF PROPERTIES
Opportunity Zones have generated an influx of buildings on the market within the
three counties. Since the first set of Opportunity Zone locations was released in
April 2018, 86 new Opportunity Zone properties have come to market, accounting
for 73% of the total Opportunity Zone properties for sale in the three counties.
Of all the properties on the market today, 15% are located within an Opportunity
Zone. These properties have hit the market at an average of 271% above their
previous purchase price. The average asking price for Opportunity Zone properties
for sale is $3.1M and the average holding time of current owners is 8 years.
Cities with the highest number of Opportunity Zone properties on the market include
Salem, Peabody, and Lowell, Massachusetts.
Of the properties for sale with Opportunity Zones, 43% are retail, 22% are
industrial/flex, 8% are office, and 26% are land. Data says that buildings located
within an Opportunity Zone are an average of 35 years older than in the other areas.
In the three counties, Essex is home to 58% of Opportunity Zone properties for sale,
Middlesex has 30%, and Rockingham has 12%.
43%
are retail
OF THE PROPERTIES
FOR SALE WITHIN
OPPORTUNITY
ZONES
are industrial/flex
22%
are office
8%
are land
26%

8. STATISTICS BY TOWN: HAVERHILL & METHUEN
Haverhill - The dollar transaction amount from the first quarter of 2019 has
already doubled the total sales of 2018 in Haverhill. Haverhill has transacted
$15.8M in sales, accruing a total of 118,824 SF. The average price per square
foot in Haverhill was $140.
Methuen - In 2018, four properties sold in Methuen, totaling $9.5M in
transactions. In the first quarter of 2019, four properties have sold, totaling
$19.73M. Methuen reported an average price per square foot of $98.
As interest rates climb, so does the cost of living. Many companies are deciding to
relocate to secondary cities, allowing them to reduce costs internally, and increase
affordability for employees. The 12-month net absorption is up 127% in the two
cities, compared to -15.5% in the three counties.
Methuen, Haverhill, Newton and Cambridge lead the way with the highest dollar
amount spent. Methuen, Haverhill and Lowell have transacted the most square
footage. Cambridge, Massachusetts, leads the way for the highest price per square
foot, coming in at an average price of $545/SF. Portsmouth, New Hampshire, came
in second with an average price per square foot of $456/SF. Newton and Woburn
trail behind in the low $300/SF range. The lowest average price per square foot was
reported from Wilmington, Massachusetts, across two transactions, at $23/SF.
WHICH TOWNS
LEAD THE WAY
FOR PRICE PER SF?
1 - CAMBRIDGE. MA
2 - PORTSMOUTH, NH
3 - NEWTON, MA
4 - WOBURN, MA
5 - WILMINGTON, MA
1 2 3 4 5
$545
$456
low
$300s
$23
{
WHY?

9. LOCAL EXPERTISE
More than 85 percent of sales in this area are purchased by MA- or NH-based
investors. MANSARD maintains strong local relationships as well as a database of
qualified buyers for local commercial properties. We know who has owned what
properties, so we can match buyers to the size and types of properties they are
most interested in owning. Going straight to the most-likely buyers saves you time
and hassle, getting you a successful deal at the right price.
MARKET KNOWLEDGE
There is no substitute for understanding the local market trends when selling a
commercial real estate property in Massachusetts and New Hampshire. For instance,
on paper it might have looked like nothing much had changed in the commercial
real estate market in MA and NH between 2017 and 2018. Transaction volume was
about the same both years. But there was a key difference under the surface:
The average price per square foot had increased 23.6%. That meant sellers were
asking for more and buyers were willing to pay. Having a local expert on your team
ensures you get the right price for your local property.
CONFIDENTIALITY
Some owners don’t want their business to be known, especially by their tenants,
so they need a private sale. Because of MANSARD’s excellent relationships in the
local market, you may not require a public sale. We have access to the people
who will pay the right price and close the deal without a public listing.
NON-STOP MARKETING
No real estate deal is complete until its closed. It is not uncommon to have several
agreements reach the final stages then fall through before the deal closes. That
means we never stop marketing your property to new potential buyers until the deal
is officially closed. It takes perseverance to sell a commercial real estate property.
At MANSARD, we’ll help you stay calm and positive as we maneuver through the
offers and negotiations, until we can celebrate the successful sale together.
EXPERIENCE
Over the last 18 years, we’ve become experts in local high-value commercial real
estate sales. We’ve negotiated the sale of more than 1,000 properties using the
MANSARD Portfolio Method. That’s why our clients trust us with their portfolios.
Our commitment to you.
Jeremy Cyrier | 14 Essex Street | Andover, MA 01810 | 617-674-2043 | advisors@mansardcre.com
Jeremy Cyrier, CCIM
President and Commercial
Real Estate Advisor