BOSTON– CBRE released its Cambridge Office and Lab MarketView for the fourth quarter of 2019, reporting lab vacancy rate to 1.5 percent and asking rents at $98.28 per square feet.
“Throughout 2019, we saw many trends amount in Cambridge including office to lab conversions, co-working lab spaces, defensive leasing and new construction in areas proximate to East Cambridge,” stated Connor Channell, Senior Research Analyst for CBRE New England. “Looking ahead to 2020, we expect the lab market to continue to expand throughout Cambridge and into neighboring cities.”
Availability increased to 7.3%, while vacancy saw a slight decrease, dropping to 3.7%. Quarterly absorption was relatively flat, and year-to-date absorption surpassed 930,000 sq. ft.
Asking rents increased 10% to $77.61 per sq. ft., primarily because there was an increase of availability in East Cambridge, where average asking rents have risen to an all-time high of $92.54 per sq. ft. In East Cambridge, availability increased from 3.2% to 4.5%, while vacancy remained flat.
Availability in the lower-priced West Cambridge market decreased to 10.5%. Competition for office space in Cambridge continues to be strong, especially from mid-sized companies looking for 10,000-20,000 sq. ft.
Vacancy dropped to 1.5% across the lab market while availability increased to 7.3%. The market posted positive absorption of 165,000 sq. ft. for the fourth quarter and has seen 611,000 sq. ft. of year-to-date absorption.
Asking rents increased to historic highs at $98.28 per sq. ft. triple net (NNN), a 14% increase from the same time period last year. The steep increase in asking rents is due to the high level of competition for space, specifically in higher-end, Class A life science properties in proximity to Kendall Square.
The lab market in East Cambridge continues to be one of the hottest across the country as vacancy is below 1%. The average asking rents in East Cambridge has reached $101.39 per sq. ft. NNN.
With demand of over one million sq. ft., and vacancy at 0.8%, we can expect the rents to continue to climb. Higher asking rents have started to pour over to Mid and West Cambridge, where the average asking rent for lab space for both submarkets sits near $80.00 per sq. ft. NNN.