Boston's Office Vacancy Lowest in Four Years

BOSTON-The overall vacancy rate for office space in the Boston area has hit a four-year low at 8.2%, signaling a broad based and continuing recovery across most business sectors, analysts say.

Brendan Carroll, with Richards Barry Joyce and Partners’ Boston office, tells GlobeSt.com that class A office space is so tight in some of Greater Boston’s key “nerve centers,” such as the Back Bay, Financial District, East Cambridge and Waltham, that vacancy levels are below 10%.

In the Financial District, which hasn’t seen occupancy levels this high since 2003, vacancy rates for class A office space hit 9.6% in the third quarter, a drop of 5% in the last five quarters alone. For larger users, contiguous class A space over 100,000 sf is so scarce that there are only three Financial District buildings to chose from, Carroll notes.

Driving occupancy levels has been a steady growth in legal, financial services and professional service tenants, Matthew Dwyer, an analyst in Jones Lang LaSalle’s Boston office tells GlobeSt.com. “We’re seeing a continued recovery through most business sectors,” says Dwyer, adding that the recovery “is showing no signs of abating.”

In East Cambridge, the numbers are even more striking. A surging biotech industry gobbled up more than 14% of the neighborhood’s vacant office space in the last three years, pushing vacancy rates from a high of 27.7% to 13.3%. Growth in this sector has been so strong that East Cambridge ranks second only to Waltham for occupancy growth in all of Greater Boston.

Demand for lab space in East Cambridge is even more pronounced. In the last three years alone, the neighborhood’s laboratory vacancy rate dipped from 32.9% to 6.3%.”That has definitely been one of the most dramatic aspects of this recovery,” Carroll says of the sharp drop in lab vacancies.