Metropolitan Boston has seen employment rebound by 30,800 jobspositive in the past 12 months, the largest increase since 2000 andjust the third time since then the rate has finished on the plusside. Unfortunately, the increase should tail off, says Delta,which anticipates an average rate of 20,800 jobs gained annuallythrough the end of the decade. That would be approximatelyone-third the average annual amount of new jobs created in the areabetween 1983 and 1989, while the yearly average between 1993 to2000 exceeded 53,000 positions.

As a result, Delta anticipates that absorption of office spacewill recede locally after two solid years. The firm puts absorptionat 2.7 million sf for 2007, which will require an accelerationfollowing 670,000 sf of absorption through mid-year. Because ofconcerns over the job growth, absorption should continue to average2.7 million sf until 2010, Delta projects, not enough to keep thevacancy rate from tracking up to double digits at 10.0% from thecurrent mark of 9.6%. Space under construction is estimated at 3.9million sf, representing just 1.4% of standing inventory. Of that,36% is pre-leased.

If Boston is ebbing, it is not alone. In the review of 15 majormetropolitan areas, Delta suggests that the national office marketis also easing after a rebound that brought the vacancy rate backto 10.5% at mid-year 2007. Net absorption in the 15 markets hadfallen to 19.0 million sf at mid-year after 61.7 million sf wasrecorded in 2006. As with Boston, Delta blames the housing problemfor dropping absorption levels nationally, and says the sub-primemortgage difficulties are having a direct impact on job growth incertain areas. The situation, says Delta, is most acute inCalifornia's Orange County where the office vacancy mark isexpected to rise from 7.3% to 8.0% by year's end. Orange County isone of the leading hubs of the mortgage industry, although Texasand Florida are also expected to be impacted by layoffs in thatsector.