BOSTON—Most regions in and around Boston share two common characteristics that reflect very strong office markets, low vacancies and rising rents. This is especially the case in Downtown Boston and particularly in the Seaport District.

For example, the downtown office vacancy rate dropped to 9.8% overall and the overall asking rent for Class A office space now stands at $56.32-per-square-foot as of the end of the second quarter, according to figures supplied by Cresa Boston. The Financial District's office vacancy rate is at 9.9%, the Back Bay at 12.1%, while the Seaport/South Station district sports a rather paltry 7.6% rate. The North Station region has just 2.5% of its nearly 2 million square feet of space sitting empty.

Joseph Sciolla, Cresa Boston managing principal, says the Seaport District has been very active for the past three years “primarily because it has been the cost alternative and it is receiving a lot of in-migration business from Downtown, but primarily Cambridge.”

He says that the Seaport District has become a popular spot for Cambridge-based businesses because the red-hot biotech market in Cambridge “is squeezing all the traditional office users out. Plus you have Google and Microsoft who keep leasing space over there.”

Sciolla adds that venture capital funded high tech firms, who were paying in the $30's-per-square-foot for space in Cambridge, are now facing major rent hikes when their leases roll over as landlords look to land tenants like Google and Microsoft who are paying north of $70-a-square-foot for space in Cambridge.

“A lot of the velocity in the Seaport District is being driven by a lot of high-tech companies that are looking for cheaper alternatives,” he says. Sciolla says that the Seaport District is also attractive because of the recently completed multifamily projects built there as well as infrastructure improvements that have transformed the Seaport into a live-work submarket of Boston that should be popular with the Millennials that are a major component of the high-tech workforce in Boston. He expects the high-tech firms to continue to look for less costly space in the Seaport and also in the Financial District over the next year or more.

“The Financial District is in my opinion the value play of the three submarkets, especially in the low rise portion of the high-rise buildings,” he says, noting that firms can still land deals in the $40s-per-square-foot in the low rise or bellies of the high-rise towers in the Financial District, Higher floors in the tower properties are commanding rents in the $65-$70-per-square-foot range.

Other takeaways from the Cresa second quarter office report include Class B rents rising 15% percent in the first two quarters, tied to absorption gains in the low-rise Class A market. The Class B rent increase leaves tenants with just a 21% price break between the least pricey Class B sector, North Station, and the most expensive, Back Bay.

Vacancy rates in Cambridge continue to fall, with the office market averaging 4.0% vacancy (Kendall Square at 2% vacancy) and the lab market averaging 4.9% vacant with Kendall Square basically at full occupancy with just a 0.3% vacancy for lab space there.

Average asking rates eclipsed previous record highs in Cambridge, with Class A at $62-per-square-foot and Class B at $54-per-square-foot in the office market and Class A lab space at $60-per-square-foot and Class B lab space at $54-per-square-foot.

When asked to compare the market today to other boom office markets in the past, Sciolla who says he has survived five real estate recessions in Boston, shared, “In my 37 years in the business this has been by far the strongest run over the last 36 months in run-up in rents in terms of percentage increases, velocity of positive absorption, velocity of new construction and tenant demand.”

He expects the market will continue to be strong for the remainder of this year and to the end of 2016. However, because of Massachusetts's low unemployment rate at 4.7% (July 2015) the market will “run out of gas” by mid to late 2017 because the marketplace will be forced to look elsewhere outside of the state for new workers. That will be difficult due to the high cost of living in Boston and the surrounding region, he concludes.