BOSTON–Strong renewal activity drove stabilization in Greater Boston market to end 2024, CBRE said in its year-end report that also highlighted life sciences and industrial markets.
Here are detials from the CBRE report”
Downtown Boston Office
The downtown Boston office market recorded a momentous 1.9 million square feet of leasing activity during the fourth quarter of 2024, heavily dominated by large renewals as notable firms reiterated their commitment to the market and the area’s talent pool. After two and a half years of negative absorption following 2021, the market saw its second consecutive quarter of positive absorption.
The sublease market as well as overall asking rents continued to stabilize this quarter. Parameters which were once used as a measure of the post-pandemic problems afflicting the Boston office market are now beginning to indicate cautious optimism. The divergence of Class A and Class B/C assets grew more acute as the dearth of centrally-located, premier quality and high-rise space remains significantly outpaced by the demand for it.
Cambridge Office
In 2024 the Cambridge office market recorded 171,000 sq. ft. of negative absorption, which was a considerable improvement over 2023 when the market saw 821,000 sq. ft. of contraction. The fourth quarter of 2024 ended with 96,400 sq. ft. of negative absorption with East Cambridge contributing 106,300 sq. ft. of negativity. Available sublease space in Cambridge was a burden, as nearly 1.1 million sq. ft. remains available through subleases. Sublease availability is up 30 basis points (bps) since last quarter to 8.6% but is down 50 bps since the end of 2023.
Suburban Office
The suburban Boston office market in the fourth quarter of 2024 showed a decrease of about 292,000 sq. ft. quarter-over-quarter (q-o-q) in overall leasing activity, with a total of 1,017,966 sq. ft leased. The addition of new subleases has significantly decreased q-o-q, dropping from 259,844 sq. ft. last quarter to 84,098 sq. ft. in the fourth quarter, with an increase in the amount sublease space going direct. Over a quarter of all leasing activity in the fourth quarter was renewals, representing 263,131 sq. ft. of leasing activity.
Greater Boston Life Science
The Greater Boston life science market faced challenges throughout 2024 primarily due to an oversupply of laboratory space that began in 2021 as construction significantly outpaced demand. In 2024, 7.6 million sq. ft. of new ground-up development and conversions was delivered, with 2.2 million sq. ft. completing construction in the fourth quarter. The fourth quarter witnessed 125,600 sq. ft. of negative absorption across the metro area, bringing the year-to-date total to 405,900 sq. ft. of contraction. Demand for lab space across the region has stabilized after a significant decline from its 2022 peak of over 6.5 million sq. ft. Demand ended 2024 at 2.2 million sq. ft, representing a 250 basis point (bps) increase from the previous quarter and a 15.9% increase since the end of 2023.
Greater Boston Industrial
Throughout 2024, the Greater Boston industrial metro stabilized as new supply was delivered to the market amidst a challenging economic year that was marked by heightened renewal activity and more cautious tenant behavior. As new speculative product broke ground, as well as delivered without secured tenants, and occupiers continued to measure their strategies against economic realities, overall availability and vacancy increased slightly quarter-over-quarter (q-o-q) to 9.0% and 7.5%, respectively. While renewals kept overall annual leasing activity higher than pre-pandemic records (8.49 million sq. ft. and 9.95 million sq. ft. of overall transactions were recorded in 2019 and 2024, respectively), fewer new deals coupled with space givebacks neutralized overall quarterly net absorption to -96,984 sq. ft. Being a relatively flat quarter, the market appears to be continuing its adjustment to the post-pandemic “new normal”, marked by more neutral supply and demand levels.
