BOSTON—Commercial brokerage firm Cresa reportsthat commercial markets in and around Boston, as well as Cambridge,are anything but tenant's markets and while strong, some still havea ways to go before they reach peak conditions.

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In its recently released second quarter market report, Cresasays of Downtown Boston, "Today's tenants indeedface headwinds due to strong demand for office space across allsubmarkets and building classes. Cresa believes we are still 24-36months from market peak.”

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Robust office space absorption during the second half of 2014,combined with few space options and a bullish attitude by officelandlords led to a sharp spike in rents in DowntownBoston. Class A average asking rentsrose more than 6% in the first half of 2015, while Class B averageasking rents soared 17% in the North Station and Seaport districtsand 13% in the Financial District.

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While there are new office projects in development, most arealready spoken for. However, two speculative projects are underwayat the Seaport—Skanska USA's 400,000-square-foot 121Seaport Blvd., and Tishman Speyer's370,000-square-foot Pier 4 building.

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“As these developers incur a certain level of risk, tenants willbenefit from the addition of new inventory amid the perfect stormof dwindling options and consistently strong demand,” Cresa statesin its mid-year tenant report for Downtown Boston.

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The brokerage firm states there are six companies searching for100,000 square feet of space or more in Downtown Boston:BNY Mellon, 400,000 square feet;Microsoft, 300,000 square feet; PutnamInvestments, 275,000 square feet;DigitasLBi, 200,000 square feet; CengageLearning, 100,000 square feet and IBM,100,000 square feet.

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Another extremely tight office market at the moment isCambridge, which Cresa describes as “one of theworld's epicenters for innovation and invention.” Cresa states,“Strong organic growth, combined with inward migration of notable,out-of-market tenants, has driven inventory to an all-time low. Forusers looking for more than 20,000 square feet in East Cambridgetoday, there are but three viable options. For the most part, anyspace scheduled to come back to the market in the next 12-24 monthshas already bee spoken for by one of the usual suspects.”

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The office vacancy rate in Kendall Square at the end of thesecond quarter was just 2.7%, Lechmere's vacancy rate for thesecond quarter stood at 3.5%, Mid Cambridge boasted a paltry 2.5%rate and Alewife/West Cambridge district's rate was 8.3%. Companieslooking for more than 100,000 square feet of space in the Cambridgeoffice market include Akamai Technologies, whichis looking for 750,000 square feet and pharmaceutical firmBiogen, which is on the market for 350,000 squarefeet of space, according to the Cresa report.

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If it is possible, the Cambridge laboratory market is eventighter than the office market. The overall Cambridge laboratorymarket's vacancy rate was 4.9% at the end of the second quarter.The vacancy rate in the very popular Kendall Square is a miniscule0.3%.

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Cresa states in its mid-year report, “Between large-scale growthfrom tenants that already have a significant footprint in Cambridgeand the continued influx of tenants looking to establish a marketpresence, any space that becomes available is typically committedbefore any marketing efforts are even necessary. The inventory inCambridge is certainly growing but all of this leasing activity ishaving very little impact on availability.”

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The brokerage firm predicts that market conditions will remaintight for some time. Major tenants in the market for lab spaceinclude: Biogen, 300,000 square feet and MomentaPharmaceuticals, 160,000 square feet.

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