The original Boston City Properties article asked whether inflation concerns could increase investor interest in Boston commercial real estate. Written in the pandemic-era market context of 2021, it argued that rental income, lease increases and limited supply could help some commercial properties offset rising prices.
That argument was a forecast, not a guarantee. The office and lab figures below describe what the original article reported in 2021; they are not measurements of today’s market.
Why inflation mattered to the article
The article described higher prices for used cars, gasoline and lumber after the pandemic began in early 2020. It reported that lumber-price increases had added an average of $36,000 to the cost of building a new home. That is a historical claim from the article, not a current construction-cost estimate.
Its central concern was purchasing power: when prices rise, a future dollar of income buys less. The article contrasted the earlier period of low inflation with uncertainty about whether the price increases would be temporary or persistent, and asked whether investment returns would keep pace.
A correction to the original Federal Reserve explanation
The old article described a roughly 2%–3% inflation target tied to the Consumer Price Index. The Federal Reserve’s own explanation instead identifies a longer-run 2% objective measured by the Personal Consumption Expenditures price index. It also monitors other price measures, including CPI. See the Federal Reserve’s inflation explanation.
The three commercial-property arguments
Rental income and operating costs. The article argued that rising rents could increase net operating income and support property values if expenses stayed under control. That depends on the actual income and costs of a property; rising prices do not by themselves establish a higher return.
Lease increases. The article discussed scheduled increases in commercial leases and used a 2% annual increase as an example. That was not a statement about every lease or an offer of particular terms. The signed lease determines whether, when and how its rent changes; a scheduled increase may not keep pace with inflation.
Limited supply. The article argued that demand for scarce commercial space could support prices in Greater Boston. Scarcity was part of its investment thesis, not proof that every property would appreciate or that a buyer could avoid losses.
The Boston office and lab figures it reported
For the third quarter of 2021, the article reported an office vacancy rate of 11.1% and a lab-space vacancy rate of 1.6%. It described the lab figure as an all-time low in that market context. It also reported 3.7 million square feet of tenant demand for the second consecutive quarter.
The article cited office and lab leasing activity and expected life-science demand as reasons for its optimism. Its closing call to invest was the author’s view at that time, not a current recommendation from this archive. The figures are retained as the original article’s reported figures; the underlying market report was not supplied with the recovered page.
Discuss a commercial-property search with Amo Realty
For a current purchase, lease or sale inquiry, use the Boston commercial real estate page. Tell Amo Realty the location, property type, intended use, budget and timing. This historical article does not provide a current property valuation, available inventory or a promised investment return.
Original credited publisher: Boston City Properties.
