BOSTON–Greater Boston’s office market posted 774,000 square feet of positive absorption in the third quarter, putting the market back on solid footing after uncharacteristically soft results last quarter, according to Transwestern Consulting Group’s “officeSTATus – Q3 2017” report.
With all four major submarkets posting positive results, overall market vacancy dropped to 12 percent, down 0.4 percentage points from last quarter.
“Even with last quarter’s relatively soft results, the market fundamentals were strong, so the turnaround wasn’t unexpected,” said Chase Bourdelaise, Managing Director of Research and Analytics. “Fortunately, we are seeing signs of continued activity and the market is well-positioned for the final quarter of the year.”
Highlights from the report include:
- The average asking lease rate for office space in Greater Boston rose to $38.77 per square foot and $44.96 per square foot for Class A space.
- Boston Central Business District (CBD) had positive absorption of 370,000 square feet, lowering vacancy 0.5 percentage points to 8.9 percent, its lowest point since 2015.
- Average asking lease rates in Boston CBD continued their upward trend, with overall rents at $53.90 per square foot and Class A approaching the $60 per square foot mark.
- Cambridge had 10,000 square feet of positive absorption, with vacancy moving down 0.1 percentage points to 4.0 percent.
- While the Cambridge office inventory continues to decline slightly in favor of laboratory space, average asking lease rates are moving in the other direction, now in the $68 per square foot range.
- The suburban markets combined for 350,000 square feet of positive absorption; 69,000 square feet along Route 128 and 281,000 square feet in the Interstate 495 belt.
- Route 128 broke a two-quarter spell of negative absorption and all three submarkets currently have vacancy rates lower than their five-year averages.
- I-495 extended its positive absorption streak to four quarters, absorbing 925,000 square feet during that time, while the market’s vacancy rate of 19.1 percent is 1.6 percentage points lower than the five-year average.