Boston: 10 Quarters of Office Growth and Counting

Greater Boston’s office market closed its tenth straight quarter of growth, but at a much slower pace than the scorching second quarter, Transwestern reported.  

The Boston market absorbed two million square feet during the second quarter, a 15-year high, Transwestern Northeast Research Director Chase Bourdelaise said. Tenants absorbed 36,000 square feet of office space during the third quarter. While a big drop quarter-over-quarter, the market saw a “robust” 3.6 million square feet absorbed during the past 12 months–a more accurate indicator of market strength–Bourdelaise said.

“We were unlikely to maintain the pace that was set during the second quarter, which had the highest absorption rate since the dot-com boom in 2000,” Bourdelaise said. “An important contributor to the robust 12-month absorption growth is the continued positive gains to the region’s office-using employment, which has increased 12 percent since 2009.” 

Transwestern reported that office vacancy across greater Boston remained relatively unchanged, inching up 0.1 percentage points to 12.1 percent during the quarter. Asking lease rates for Class A office space rose slightly to $50.60, up from $50.26 last quarter.  

Boston’s central business district also closed its 10th straight quarter of positive absorption, Bourdelaise said. Vacancy fell to 8.3 percent, the lowest level since 2001.

The city’s Seaport District experienced its first single-digit vacancy rate in 15 years: 8.9 percent. “Anyone who crosses into the Seaport District is struck by what appears to be a changing horizon nearly every day,” Bourdelaise said. “Understandably so, since 40 percent of the district’s total inventory is new (defined as buildings built since 2000). Bourdelaise said the Seaport District recently supported an influx of legal, biotech and financial services occupiers “that were previously few and far between.”  

In Cambridge, vacancy fell to just 4.5 percent with 145,000 square feet of positive absorption between July and September. Cambridge availability reached a record low 5.1 percent.

The high-tech corridor Route 128 submarkets combined for 72,000 square feet of positive absorption, marking the thirteenth straight quarter of positive growth, Transwestern reported. 

The Mortgage Bankers Association will host a special Commercial Real Estate Finance Careers Forum for Boston-area undergraduate and graduate students on Tuesday, Nov. 3 from 6:00 – 9:00 PM at Harvard University’s Loeb House. Click here for more information.