BOSTON– Boston’s office market is starting to show signs of stabilization, but leasing conditions still lean in favor of tenant, according to Coller’s third quarter report.
Here are Key Takeaways from Collier’s report:
- The vacancy rate appears to be stabilizing.
- Office demand is trending upward.
- Sublease availability is decreasing in Boston, Cambridge, and the Suburbs.
- Investment sales remain sparse.
Although the 23% total availability rate is 10 percentage points above the metro’s pre-COVID low, it is essentially unchanged from the previous two quarters, the report said.
Including the large amount of space in just-delivered buildings, the market has absorbed a net of more than one million SF over the past six months.
The metro has had two consecutive quarters of positive absorption for the first time in about three years. Other contributors to positive momentum include some companies reabsorbing sublease space, high-vacancy buildings earmarked for conversions to other property types, and a drop in the number of large new vacancies coming to market.
The report said that leasing conditions still lean in favor of tenants.
For the first time on record, direct vacancies here have surpassed 33 million SF, after tenants returned some sublease space to landlords and new product delivered empty space.
The metro still has about 900,000 SF of speculative space underway with no announced commitments. And any leasing in new buildings is likely to leave backfill space in other properties.
The report added that reduced white-collar workforce and the number of tenants with leases rolling that could downsize may both forestall a sustained recovery. Nearly 10 million SF of sublease offerings is available across the metro.
