Vacancy Edges Up Slightly Due to Delivery of 1.5 Million SF to Market 

Greater Boston closed a very strong third-quarter 2016, posting 899,000 square feet of positive absorption, more than four times the amount of the previous quarter, according to Transwestern’s new “officeSTATus – Q3 2016” report. Market-wide vacancy edged up to 13.1 percent, from 12.7 last quarter, due to 1.5 million square feet of office space being added to the market.

“While the leasing market has been very active this year, we’ve also seen a lot of activity in development, due in large part to low borrowing costs,” said Chase Bourdelaise, Northeast director of research. “Even with the large amount delivered to market this quarter, 3.4 million square feet remain under development. All market indicators point to a solid close for the year.” 

Highlights from the report include: 

• Vacancy in Boston’s Central Business District remained steady at 9.7 percent, as positive absorption of 644,000 square feet was balanced by 655,000 square feet of new space delivered.
• In the last 12 months, nearly two million square feet of office space have been delivered to the Boston CBD, with another 899,000 square feet in the pipeline.
• In Cambridge, vacancy dipped below 3 percent for only the second time since 2000, to close at 2.9 percent.
• The East Cambridge market has a vacancy rate of 2.7 percent, its lowest point since 2000, while Mid and West Cambridge are also very tight, at 1.4 percent and 5.4 percent, respectively.
• The average asking lease rate in Cambridge for Class A space is $64.51 per square foot, more than $15 higher than only three years ago. 
• The Route 128 submarkets had 416,000 square feet of space absorbed, with the vacancy rate edging up 0.4 percentage points to 13.4 percent, due to 484,000 square feet being delivered to market.
• Within the Interstate 495 submarkets there was 210,000 square feet of negative absorption; however, for the last 12-month period, the absorption rate is in positive territory, at 11,000 square feet.

Download the full “officeSTATus – Q3 2016” report at: http://twurls.com/boston-office-3q16.

In addition to “officeSTATus,” Transwestern publishes 10 other quarterly research reports for the Boston market: “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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