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22 2015 Economic Forecast www.wbjournal.com Worcester Business Journal Real Estate People. Places. Product. Photographic images for advertising, public relations, graphic and corporate communications groups . See the difference. 165 Holly Lane • Holliston, MA 01746 Phone/Fax: 508.429.3188 • www.ronbouleyphoto.com R O N B O U L E Y P H O T O G R A P H Y premium seating worcester sharks shark tank & private suites Customizable food and beverage menus Visit from the Sharks mascot FINZ Perfect for group outings, corporate hospitality, birthday parties and more Private function room with full service bar Dedicated service representative sharksahl.com 508.929.0500 a t t h e d c u c e n t e r real estate principal at Kelleher & Sadowsky, the Worcester-based commercial real estate brokerage. "We saw a lot of businesses that had been renting space and had been sitting on the sideline for the last five or six years that are now taking the plunge to pur- chase facilities and equipment," he said, citing increased lending support from banks as a contributing factor. During that tighter loan market, businesses were forced to make the most of what capital they had, Mancini said, leaving them to postpone large purchas- es, such as real estate. This move toward purchasing will have broad-reaching benefits, he said, pushing up commercial property values throughout 2015. Commercial flight to quality and efficiency A continuing trend into 2015 will be an active pursuit by businesses for higher-quality rental space, according to Mancini. When that takes place, along with efficiency and consolidation, businesses end up with not only more modern and well-appointed space, but often a savings over their previous location, he said. "We are seeing tenants that are moving from lower quality industrial and office buildings and they are upgrading their facilities," Mancini said, explaining that, for the most part, these are moves within the same communities. Tenants moving from older Class B or C office or manufacturing locations can fit more into modern Class A space, whether that means more efficient seat- ing configurations or higher ceilings for more vertical storage, and the capacity to handle larger equipment, Mancini said. Through this strategy, a company can move to a space that rents for more, yet save money by taking up less space. Efficiency is the primary consideration for every business Kelleher & Sadowsky talks with, Mancini said. This will lead to increasing competition for that Class A space, while the vacancy rates for lower-quality space will remain higher in 2015, he said. Suburban-to-urban switch The recession put many people's plans to move on the backburner, including those looking to downsize and simplify their lives. Recent — and not so recent — college graduates were moving home, with a record 36 percent of the country's adults ages 18 to 31 living with their parents in 2012, accord- ing to the Pew Research Center. In 2015, the improving economy could help many of those post-college students move out of their parents' homes, which would allow them to start thinking about downsizing, according to Warren. An urban environment is increasingly appealing not only for baby boomers moving from larger homes, he said, but anyone looking for a more compact neighborhood. "A lot of people want to return to more urban living and walkable neighborhoods," Warren said. "You see the new construction of luxury condominiums in the Boston area. People used to think of the city as dirty and dangerous, I think that is going away to a large degree. Now they think of it as hip and exciting and lively." n continued recovery for housing; a push for better office space Office vacancy rates down from 2012 to 2014 Both the Worcester and 495 markets gained in the amount of available office space over the last two years, while the vacancy rates fell. Supply in square Vacancy rate Supply in square Supply in square Supply in square footage Q32014 as of 12/18/14 footage Q32013 Vacancy rate footage Q32012 Vacancy rate footage Q32011 Vacancy rate Route 495 49,287,000 22.3% 49,096,000 24.5% 48,476,000 23.8% 47,062,000 26.3% Worcester 2,017,183 19.3% 2,015,000 19.2% 1,814,000 20.4% 2,014,000 15.2% Source: Colliers International >> Continued from Page 21 4 5