Higher Vacancy, Lower Rents in Greater Boston Office Market

April 7, 2010
By Allison Landa, News Editor

Courtesy Flickr Creative Commons user ReneS

Optimism mixed with some glum news for the Greater Boston office market made itself apparent in Richards Barry Joyce & Partners’ OfficeSTATus report for Spring 2010.

The commercial real estate firm found that vacancy was up and rents down in the first quarter, with the market experiencing 204,000 square feet of negative absorption and a 0.3 percent vacancy increase to 15.8 percent. Asking lease rates were down 11 percent amongst Class A office space in Boston’s Central Business District, falling to $47.31 per square foot over the last twelve months. The Suburbs also saw a decrease in rates, with an 8 percent tumble to $23.56 per square foot over the same time period.

However, there is some bright news: rents have stabilized in the city’s Financial District, East Cambridge, and Route 128 West, which are all considered bellwether districts.

“Despite material near-term challenges, business managers remain increasingly optimistic about general business conditions in Greater Boston as well as the region’s hiring climate,” the report asserts. “With vacancy already at reasonable levels and speculative construction approaching record low levels, the region is well-positioned to experience landlord/tenant balance when positive demand returns.”

Employment must stabilize in order for economic recovery to continue, though. Unemployment in Boston’s Metropolitan Statistical Area has increased by 1.3 percentage points over the last quarter, according to the report. This is in opposition to national employment, which fell 0.4 percentage points over the same time period.