BOSTON—Boston’s hot office market continues strong and will see about one million square feet of brand new occupied office space in 2018. The vacancy in the Boston office market at the end of the first quarter this year stood at 6.8 percent, down from 7.9 percent at the first quarter of 2017, according to a report from Boston brokerage firm Cushman & Wakefield.
The overall office vacancy rate in Greater Boston at the first of first quarter this year was 9.9%, down from 10.1% a year ago, according to the report. Of all the sub-markets, Cambridge was the tightest, at 2.1% vacancy at the end of the first quarter this year, down from 2.6% a year ago.
“Cambridge is the hottest market,” said Cushman & Wakefield Research Director Ashley Lane. “In 2018, the office market of Boston proper will see a brand new occupied space of one million square feet.”
Here are the other highlights from Cushman & Wakefield’s report for the first quarter 2018:
- The region posted its strongest first quarter since 2006.
- The average age of a downtown class A building is 35 years old.
- In Boston, a string of large deals continued a trend started 18 months ago. WeWork took 100,000 SF formerly occupied by Digitas at 33 Arch Street; DraftKings took 100,000 SF at 500 Boylston Street and e-commerce software developer, Salsify, committed to 55,000 SF at 101 Federal Street. Cengage leased 117,000 SF at the under-construction Pier 4 in the Seaport while Rapid7 took 147,000 SF at Boston Properties’ new development, The Hub, at North Station.
- The Cambridge story of high rents and limited availability has been the same for over a decade – and the first quarter of 2018 was no exception. Office vacancy now stands at 2.1%, while there is only 86,000 SF of vacant lab space in a 10.0 MSF market – a rate of just 0.9%
- In the suburbs, life science deals are still grabbing headlines. Homology Medicines took 67,000 SF at 1 Patriots Park in Bedford; Kala Pharmaceuticals leased 66,000 SF at Linx in Watertown; Concert Pharmaceuticals took 55,000 SF in Lexington; and Visterra will relocate from One Kendall Square in Cambridge to 275 Second Avenue in Waltham.
- At 379,145 SF YTD, Boston experienced its strongest first quarter in 12 years.
- In the lab sector in Cambridge, overall vacancy stands at a mere 0.9%, while overall absorption for the office and lab sectors totaled just over 200,000 SF in the first quarter.
- 2017 was an exceptional year for life science leasing activity in the suburbs – and the streak continued thorough the first quarter of 2018. As conditions in Cambridge grow increasingly prohibitive, many life science firms are seeking rent relief in the inner suburbs and along 128 Central.