BOSTON–Vacancies continued to climb throughout 2024, to a high of 12%, about 2.6 percentage points higher than at the end of 2023 in Greater Boston, according to Colliers Boston.
In buildings completed between 2023 and 2024, the vacancy rate is 61%, not including recent Amazon deliveries, as absorption of large blocks has not kept up with the pace of completions, according to the report.
Sublease space reached a 12-year high, exceeding 2.9 million SF of availability, 47% higher than last year. That significantly differs from market conditions in 2021, when available sublease space reached a record low of 500,000 SF. As vacancy rises, asking rents have inched down from their peak in Q1 of 2024.
Here are some key takeaways from the report:
- Vacancy continues to rise.
- Rent growth is tapering off.
- Negative net absorption reflects market conditions.
- Sublease space is near a record high.
After two-plus years of increases, distribution property vacancies may be stabilizing.
Compared to vacancy rates in other product types, those in distribution buildings, including warehouses and high bay, declined slightly in the fourth quarter, as direct vacant space decreased by 329,000 SF. However, the subtype had almost doubled its available sublease space over the past few quarters, including 244,000 SF added in the fourth quarter. After a period of increased construction, fewer distribution buildings were delivered in the fourth quarter, allowing vacancy to catch up, the Collers report said.
Conversely, the growth of direct available manufacturing space left that sector with an 8.4% total vacancy rate. Similarly, flex vacancy rates continued to rise throughout 2024, reaching 12.5% in the fourth quarter, according to the report.
