BOSTON—Nearly 900,000 square feet of office space was absorbed in Greater Boston in the third quarter. Despite the heady leasing activity, the region's vacancy rate remained stable due to the high level of new office development taking place here.
In its third quarter report on Greater Boston, brokerage firm Transwestern reports the region posted a positive absorption of 899,000 square feet. However, due to the fact that 1.5 million square feet of office space was delivered over that three-month period, the region's office vacancy rate crept up slightly from 12.7% in the second quarter to 13.1% at the end of September.
Vacancy in Boston's Central Business District remained steady at 9.7%, as positive absorption of 644,000 square feet was balanced by 655,000 square feet of new space delivered at 888 Boylston St. and 80 Guest St. The brokerage firm notes that nearly 2 million square feet of office space has been delivered to the Boston CBD in the last 12 months, with another 899,000 square feet in the pipeline.
“While the leasing market has been very active this year, we've also seen a lot of activity in development, due in large part to low borrowing costs,” says Chase Bourdelaise, Transwestern's Northeast director of research. “Even with the large amount delivered to market this quarter, 3.4 million square feet remain under development. All market indicators point to a solid close for the year.”
Averaging asking rents in Boston rose 63 cents from the previous quarter to $51.80-per-square-foot.
In Cambridge, vacancy dipped below 3% for only the second time since 2000, to close the third quarter at 2.9%. East Cambridge had a vacancy rate of 2.7%, its lowest point since 2000, while Mid and West Cambridge are extremely tight with vacancy rates of 1.4% and 5.4%, respectively.
The average asking office ease rate in Cambridge for Class A space rose by more than $15-a-square-foot in the last three years to is $64.51-per-square-foot at the end of the third quarter.
Bourdelaise, the author of the third quarter report noting that low borrowing costs have fueled development in Greater Boston, noting that there is 3.4 million square feet of office space currently under development.
“International investors, primarily Canadian and German, have made long term bets on the Boston market,” Bourdelaise wrote. “In 2016 alone, German investors have purchased five office buildings totaling $833.3 million. Canadian investments total $1.64 billion in six properties over the last 24 months.”
Other highlights of the Transwestern report include:
The Route 128 submarkets had 416,000 square feet of space absorbed, with the vacancy rate edging up 0.4 percentage points to 13.4%, due in large part to 484,000 square feet being delivered to market.
Within the Interstate 495 submarkets there was a total 210,000 square feet of negative absorption, although in the last year the region had positive absorption of 11,000 square feet.
BOSTON—Nearly 900,000 square feet of office space was absorbed in Greater Boston in the third quarter. Despite the heady leasing activity, the region's vacancy rate remained stable due to the high level of new office development taking place here.
In its third quarter report on Greater Boston, brokerage firm Transwestern reports the region posted a positive absorption of 899,000 square feet. However, due to the fact that 1.5 million square feet of office space was delivered over that three-month period, the region's office vacancy rate crept up slightly from 12.7% in the second quarter to 13.1% at the end of September.
Vacancy in Boston's Central Business District remained steady at 9.7%, as positive absorption of 644,000 square feet was balanced by 655,000 square feet of new space delivered at 888 Boylston St. and 80 Guest St. The brokerage firm notes that nearly 2 million square feet of office space has been delivered to the Boston CBD in the last 12 months, with another 899,000 square feet in the pipeline.
“While the leasing market has been very active this year, we've also seen a lot of activity in development, due in large part to low borrowing costs,” says Chase Bourdelaise, Transwestern's Northeast director of research. “Even with the large amount delivered to market this quarter, 3.4 million square feet remain under development. All market indicators point to a solid close for the year.”
Averaging asking rents in Boston rose 63 cents from the previous quarter to $51.80-per-square-foot.
In Cambridge, vacancy dipped below 3% for only the second time since 2000, to close the third quarter at 2.9%. East Cambridge had a vacancy rate of 2.7%, its lowest point since 2000, while Mid and West Cambridge are extremely tight with vacancy rates of 1.4% and 5.4%, respectively.
The average asking office ease rate in Cambridge for Class A space rose by more than $15-a-square-foot in the last three years to is $64.51-per-square-foot at the end of the third quarter.
Bourdelaise, the author of the third quarter report noting that low borrowing costs have fueled development in Greater Boston, noting that there is 3.4 million square feet of office space currently under development.
“International investors, primarily Canadian and German, have made long term bets on the Boston market,” Bourdelaise wrote. “In 2016 alone, German investors have purchased five office buildings totaling $833.3 million. Canadian investments total $1.64 billion in six properties over the last 24 months.”
Other highlights of the Transwestern report include:
The Route 128 submarkets had 416,000 square feet of space absorbed, with the vacancy rate edging up 0.4 percentage points to 13.4%, due in large part to 484,000 square feet being delivered to market.
Within the Interstate 495 submarkets there was a total 210,000 square feet of negative absorption, although in the last year the region had positive absorption of 11,000 square feet.
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