Market Regains Footing After Slow First Quarter with 209,000 SF of Positive Absorption

Greater Boston’s office market, which had a slow start to the year, closed the second quarter in positive territory, according to Transwestern | RBJ’s new “officeSTATus – Q2 2016” report. The market had 12.7 percent vacancy on 209,000 square feet of positive absorption, while the average asking lease rate increased 55 cents to $42.50 per square foot, a new high since 2002.               

“It’s a very good thing to see the market pick up quarter-over-quarter, but we’ll be more interested to look at the results over the course of a year or even longer,” said Northeast Research Director Chase Bourdelaise. “That frame of reference provides a more accurate view of the market and puts the relatively slow first quarter into better perspective. We anticipate the positive results to continue, based on the construction pipeline and a few large leases likely to commence soon.”

Highlights from the report include:

• At 12.7 percent, the market-wide vacancy rate has remained under 13 percent for seven consecutive quarters.
• Vacancy in Boston’s Central Business District rose by 0.6 percentage points to 9.7 percent, while Class A asking lease rates held steady at $54.49 per square foot.
• Average Class A asking lease rates in the Seaport District hit the highest recorded level at $57.44 per square foot.
• In Cambridge, 37,000 square feet of positive absorption pushed vacancy down to 3.2 percent.
• Class A average asking lease rates in Cambridge are $62.94 per square foot and hit the low $80s in East Cambridge, while the 2 million-square-foot Mid Cambridge market has only 3,000 square feet of office vacancy.
• In the suburbs, vacancy and average asking lease rates remained steady at 13 percent and $30.80 per square foot along Route 128 and 21.8 percent and $21.26 per square foot along Interstate 495.
• The 1.6 million square feet under construction in Route 128 West is the highest amount in that market since 1998.

Download the full “officeSTATus – Q2 2016” report at: http://twurls.com/boston-office-2q16.

In addition to “officeSTATus,” Transwestern | RBJ publishes 10 other quarterly research reports: “indSTATus,” which focuses on manufacturing, warehouse and flex property types, and individual “marketSTATus” reports on nine crucial submarkets. The firm’s biotechnology-focused report, “bioSTATus,” is released twice a year. In total, the firm produces 46 reports per year, in addition to custom research projects for clients.

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