"While the possibility of Bank of America and Fidelity returning space to the market may slow the pace of recovery during the short term, we continue to track net absorption in the market of approximately 600,000 sf for calendar year 2004," Adams adds. Looking further, he predicts upwards of 1.6 million sf of net absorption over the next 24 months. The primary drivers, according to Adams, are mutual fund, money management and specialty consulting firms along with the city's growing legal community.

Class A buildings in non-traditional locations, which carry a discount of up to 30% in comparison with premium tower pricing, showed increased activity this year. In Cambridge, large, mature lab tenant requirements are getting fulfilled after lingering in the market for the past two years. Rental rates on these properties have fallen as much as $15 per sf, Adams reports, bringing them down to between $30 per sf and $40 per sf, compared with peak pricing of $50 per sf to $60 per sf during 2000 and 2001.

Newer biotech companies are migrating to the Northwest Route 128 suburbs. The Hunneman report cites a "flight to quality" trend in the Route 128 submarket, where tenants are inking leases in the $20 per sf to $30 per sf range for class A space.

On the investment front, a number of buildings of buildings are up for sale, especially in the suburbs where available product has been limited for more than a year. In anticipation of completion of the Big Dig in 2005, Adams says Downtown property values have risen between 10% and 15%.