Record Number Of Tenants Looking At Downtown Boston Office: Report
The number of companies looking for downtown Boston office space is at an all-time high, according to a new CBRE report detailing what a researcher calls the first concrete sign of a market rebound following the pandemic downturn.
Today, approximately 110 companies are looking for a combined 3.4M SF of office space in Boston, a CBRE report Wednesday said. Of the 3.4M SF of requirements, 1.1M SF is committed, defined as companies and landlords in the midst of lease negotiations for both sublease space and direct space, CBRE New England Director of Research Suzanne Duca said.
“Assuming the majority of them sign, that’s a really good sign of health and sign of commitment by companies that want to be downtown, want to have a presence,” Duca said.
Another 580K SF of requirements remain “on hold,” which Duca describes as companies in the market still evaluating move-in plans. CBRE hadn't tracked on-hold space before Q3 2020.
Prior to the coronavirus pandemic, at the end of Q1 2020, there was 2.3M SF of active demand, according to CBRE. The Boston office market was hit hard by companies fleeing during the pandemic, with commercial real estate researchers describing historically high negative absorption and sublease availability at the beginning of this year.
The bleeding began to slow in Q1 2021 with availability in downtown Boston decreasing 10 basis points to 18.5% and vacancy dropping to 11.9% according to the CBRE report, early signs that the worst of the pandemic’s market blow had been reached. Significant office leases have been inked in the past six months, from Amazon’s 630K SF lease in the Seaport and Sasaki’s full-building 64K SF lease in Q1, to Whoop’s 121K SF commitment to a Related Beal’s rising Fenway project last month.
Companies today on average are taking smaller spaces in what Duca described as a modest decline in overall footprint, as firms navigate hybrid remote work policies. Duca's comments echo a new CBRE national report in which more than half of investors surveyed expect office leasing volumes to decrease less than 10% over the next three years.
“I think the vaccine rollout around this region has gone extremely well, but I think faster than probably everyone thought initially,” Duca said. “I think that has sped up the process faster, all for the positive.”
Millennium Partners Boston, which is constructing the 691-foot-tall Winthrop Center, slated to complete in late 2022, is seeing the rise in interest firsthand. The tower is one of four major skyscrapers rising across downtown Boston, which total a combined 2.7M SF of largely unleased office space set to deliver in the next few years.
“We are seeing steady demand for office space, and are being asked more questions about the benefits that an office building can and should deliver in terms of health, wellness and the environment,” Millennium Partners Boston principal Rich Baumert said in a statement.