Huge Rent Increases And Positive Absorption: No Pause For Boston Office Market In '17
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The Boston office market had strong momentum in '16 and it's not pausing for a moment in the new year, according to Transwestern's Northeast director of research, Chase Bourdelaise.
“The market is very well positioned heading into 2017, with a number of high-profile moves on the horizon and more than 2M SF expected to deliver during the year," Bourdelaise said. "Also, we expect Boston's commercial office market to remain a top destination for investment dollars.”
“The Greater Boston market is on a prolonged period of positive results, with 14 of the past 15 quarters delivering positive absorption,” he told us. One result is lower vacancy in the CBD, where the vacancy rate dropped 10 basis points to 9.6% in Q4, with 59k SF of positive absorption during the quarter. Average asking lease rates rose to $55.09/SF, according to Transwestern data.
Availability for Class-B office space in Boston reached its lowest rate since 2008 at 13.1%, with asking lease rates increasing 10.5% during the past year to $41.31/SF, Transwestern found.
In Cambridge, negative absorption of 104k SF bumped vacancy up 90 bps to 3.8%, but that's still very tight. Average asking lease rates reached $65.62/SF in Q4, up $1.11 over last quarter and 10.1% from two years ago.
The Route 128 submarkets enjoyed 433k SF of absorption in Q4, dropping their vacancy rate 50 bps to 12.9%. Route 128 North led the charge with 331k SF of positive absorption, snapping a three-quarter negative streak.