Office Tightens in Boston's Northwest Suburbs

According to a preliminary study by Grubb & Ellis, the northeast market, which includes Lexington, Concord, Bedford, Woburn and Burlington, experienced more than 250,000 sf of absorption in the fourth quarter. In the first three quarters of 2006, about 210,000 sf of office space was leased, Ryan McCullough, a research manager with Grubb & Ellis' Boston office, tells GlobeSt.com. During the third quarter, only 51,000 sf was absorbed in Boston's northwest suburbs, according to figures.

"We've seen an awful lot of absorption there but what's really significant is that it's coming at such a high vacancy." says McCullough, noting that the northwest market has become attractive to businesses looking for cheaper rents and large blocks of expansion space.

At the start of the quarter, vacancy rates in the northwest market, which has about 14.7 million sf of inventory, was 19.1%. Heavy leasing activity has cut that vacancy rate by nearly 2% to 17.4%.

Among the largest leases during the quarter were Fresenius Medical, which relocated from Waltham into 70,000 sf at 32 Hartwell Ave., in Lexington; and Emerson Hospital, which signed a 46,000-sf lease at 196 Baker Ave. in Concord.

Along with large amounts of available space, attractive lease rates in the northwest suburbs are also drawing tenants. In Burlington, which has a 21% class A vacancy rate, rents average about $2 per sf lower than in nearby Waltham where only 10% of the class A space is available, McCullough says.

However, it's not just Boston's northwestern suburbs that are seeing significant leasing activity. McCullough says the entire suburban market is getting healthier as the economy continues to improve.