Vacancy Rates Continue to Rise

In the city's central business district overall vacancy rate for the second quarter of this year was 12.4%, with 8.2% of that figure direct vacancy. Overall vacancy for the second quarter of last year was 5.3%. The increase in availability has, not surprisingly, had an effect on rental rates. At the end of 2001, average rental rates for this area was $47.40; by the end of the second quarter of 2002 that has dropped to $40.04.

But the city's situation looks good compared with other markets in the area. In Cambridge the overall vacancy rate has jumped from 5.4% for the second quarter of last year to 17.6% for the second quarter of this year, with 11.6% of that figure direct vacancy. Here, too, rents are dropping. At the end of last year average rental rates were $47.10-- the current average rental rate is $41.07.

The story is the same for the inner suburbs. Overall vacancy rates continue to decline from 13.4% in the second quarter of last year to 25.3% for the second quarter of this year. Nearly 22% of that is direct vacancy. With less sublease activity there is less pressure on the rates which translates into less of a reduction--from $31.76 at the end of last year to $30.68 the second quarter of this year.

The Greater Boston suburbs saw the biggest increase in overall vacancy rates, from 8% in the second quarter of last year to 23.4% now, with 14.2% of that direct vacancy. Rental rates in this area decreased from an average of $27.66 at the end of last year to $25.85 now.