BOSTON – Boston office rents continued to climb during the first quarter, and forecasters are optimistic for the year ahead as average asking rent rose to $69.05 per square feet in Back Bay, followed by Seaport District and Central Business District, according to CBRE’s Q1 2019 Boston Office market report.
In the Boston Office market, asking rents continued to climb, reaching $62.24 per sq. ft. Premium spaces have been seen quoting over $100.00 per sq. ft., particularly in core assets in the Back Bay. Class B rents saw a particularly large jump from Q4 2018, growing from $51.52 per sq. ft. to $54.31 per sq. ft. Availability ticked up slightly to 13.4%, partly attributed to speculative projects under construction that are now actively seeking tenants. Quarterly adsorption was also up, at 500,000 sq. ft. of positive adsorption in the first quarter.
“Demand continues to outpace supply, as tenants in all industries view Boston as an ideal location for talent,” said Christian Vallis, Research Analyst for CBRE New England. “With several Class A construction projects creating large block opportunities in the coming years, Boston shows no signs slowing of down.”
CBD Office Market:
Activity was strong in the CBD in Q1, featuring almost 180,000 sq. ft. of positive absorption. Leases were primarily signed by TAMI tenants, with a decent showing by the business services and FIRE sectors as well. Asking rents saw a notable increase from Q4 2018, rising from $61.95 per sq. ft. to $63.26 per sq. ft. This increase was almost entirely due to Class A rents, which grew from $64.33 per sq. ft. to $65.82 per sq. ft.
Back Bay Office Market:
Asking rents in the Back Bay grew significantly in Q1, solidifying the resurgence of this submarket seen in recent quarters. Overall rents grew from $65.51 per sq. ft. in Q4 2018 to $69.05 per sq. ft. in the first quarter. Class A rents alone saw an even larger increase: from $69.80 per sq. ft. in Q4, to $74.08 per sq. ft. in Q1. The Back Bay saw vacancy decrease in Q1, falling from 6.3% in Q4 2018 to 5.7% in Q1 2019. The submarket also saw healthy absorption in the first quarter of 191,000 sq. ft.
Seaport Office Market:
Average asking rents in the Seaport grew at a healthy clip in Q1. After closing 2018 at $64.30 per sq. ft., Q1 saw asking rents finish at $66.55 per sq. ft. Availability decreased in Q1, falling from 15.0% to 13.9%, while vacancy increased from 6.9% to 10.2% when 601 Congress Street went dark following Manulife’s official consolidation to the Back Bay.