After delivering one of the more dynamic years on record during 2015, Greater Boston’s office market had a slow start to 2016, closing the quarter with 488,000 square feet of negative absorption, according to Transwestern | RBJ’s new “officeSTATus – Q1 2016” report. Despite seeing the first negative quarter in three years, Boston’s vacancy is a healthy 12.5 percent, and average Class A asking lease rates of $41.95 are up 3.5 percent from first-quarter 2015.
The strong pace that the market had set was unlikely to continue, so this slower quarter was to be expected. Most market indicators, such as vacancy, availability and asking lease rates, are still at levels considered to be quite positive. And with a few large leases set to commence within the next two quarters, we anticipate the market will soon be back on track.
Highlights from the report include:
- Market-wide vacancy rose 0.4 percentage points from last quarter to 12.5 percent.
- Class A asking lease rates remained fairly steady, dropping a slight 11 cents to $41.95 per square foot.
- Vacancy in Boston’s Central Business District remained flat at 9.1 percent, while asking lease rates remained in the mid-$50s, at $54.42 per square foot.
- In the past five years, Class A asking lease rates in Boston’s Back Bay have risen more than $6.00 to $61.30 per square foot.
- Availability of Class A space in Boston’s Seaport District dropped 0.9 percentage points to 6.7 percent.
- While experiencing 88,000 square feet of negative absorption, the Cambridge market has only 3.5 percent vacancy, up 0.8 percentage points from last quarter.
- East Cambridge has 4.1 percent vacancy, down more than half since the 8.4 percent in first-quarter 2015.
- In the suburbs, vacancy rose 0.5 percentage points to 12.9 percent along Route 128 and 0.8 percentage points to 21.5 percent along Interstate 495.
Download the full “officeSTATus – Q1 2016” report here.
As regional research director, Chase Bourdelaise oversees the research efforts of Transwestern's New York, New Jersey and Massachusetts offices.
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