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CAMBRIDGE, MA-It was a dark and stormy start to 2008 for the city’s office market, but a lease of more than 21,000 sf at 1030 Massachusetts Ave. is providing a bit of sunshine as the second quarter commences. Architectural firm KingStubbins has opted to renew and expand at the four-story, 65,000-sf building, which is owned by Paradigm Properties.

“It’s a nice deal for the building,” Paradigm principal John Caldwell tells GlobeSt.com. “They are a great tenant who has been there for a long time, and we are ecstatic that they are staying.” Caldwell represented Paradigm in-house negotiating the five-year agreement.

Although it was in the red for absorption by 4,000 sf, the mid-Cambridge submarket of 3.3 million sf actually outperformed the East Cambridge and Alewife districts, according to the first quarter officeSTATus report issued yesterday by Richards Barry Joyce & Partners. The core East Cambridge submarket of 7.9 million sf posted negative absorption of 58,000 sf and Alewife had a deficit of 11,000 sf, RBJ estimates. Those outcomes led to negative 73,000 sf overall, marking the first time since 2005 that Cambridge has registered negative absorption for a quarter.

Rental rates also eased off after a run-up to near record levels in 2007. For the first time in 10 quarters, class A rents dipped, falling slightly by four cents to $52.97, according to RBJ. Cambridge vacancy rose 0.5% to 7.1%, although mid-Cambridge remains tight at 2.6% vacant. Colliers Meredith & Grew puts the rate there at 3.3%, well below the 12.7% average in that firm’s review of 19.7 million sf. CM&G estimates Q1 negative absorption is even greater than that in the RBJ survey, placing the figure at minus 212,000 sf.

“Demand was generally soft for both the lab and office markets,” acknowledges CM&G EVP Joseph Flaherty, who represented KingStubbins in its lease negotiations along with VP Tucker Hansen. There is some movement among tenants in the 5,000-sf to 15,000-sf range, Flaherty reports, but he says Cambridge is bereft of the large requirements seen in past years. “It’s very thin right now,” he says of the tenant constituency.

As with Flaherty, Caldwell expresses concern about leasing activity early on in 2008. “We’re being cautious,” he relays, adding that the KingStubbins deal was a welcome result after the firm had explored alternatives throughout Cambridge, and especially since the commitment brings occupancy at 1030 Massachusetts Ave. to 100% in an uncertain economic environment. Paradigm also landed the Center for Applied Research in a Q1 lease of 6,400 sf, with that firm relocating to 1030 Massachusetts Ave. from Harvard Square. Grubb & Ellis AVP Dan Krysiak was broker for Paradigm on that lease, while Tom Johnson of Hammond Real Estate was agent for the tenant.

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