Boston– Boston office rents continued to climb, recording the strongest quarter of growth in the last twenty years, according to CBRE’s Q3 2019 Boston office market report.
In the Boston office market, asking rents reached $66.04 per sq. ft., growing 2.3% from the second quarter. With rents at $60.31 per sq. ft. at this time last year, year-over-year rent growth was 8.7%. The Boston office market saw 1.1 million sq. ft. of positive absorption during the quarter, and availability fell from 13.7% to 13.0%. The biggest story of the quarter involved WeWork, which signed on for several new locations in the downtown market, continuing a surge of leasing that has been growing for several quarters.
“Coworking, TAMI and life science companies continued to expand and take space in the Boston office market the quarter, increasing the market’s diverse tenant base,” said Suzanne Duca, Director of Research for CBRE New England. “With the recent noise about the potential slowdown of leasing in the flexible space market, it is worth noting that demand for space by traditional tenants remains as strong as ever, and the market is poised for continued growth.”
Central Business District: The CBD had another strong quarter, boasting 243,000 sq. ft. of positive absorption. Class A rents increased to $74.38 per sq. ft., a new high watermark.
Back Bay: Asking rents in the Back Bay continued to climb in the third quarter, hitting $70.96 per sq. ft., a new high for the submarket. This represents 8% growth in the last 12 months, and a nominal jump quarter-over-quarter. This slight increase has more to do with the lack of prime space available than flattening rents. Vacancy continued to compress, and declined almost 300 basis points to 2.6%, the tightest the submarket has been since the early 2000s.
Seaport: The Seaport had the strongest quarter of the downtown submarkets, with 548,000 sq. ft. of positive absorption. Asking rents increased more than $1.50 per sq. ft. to $67.86 per sq. ft.