The third quarter 2012 marked the sixth consecutive quarter of positive absorption in the Boston office market, as the vacancy rate declined to 14.1%—its lowest level since the fourth quarter 2009. The trend has been largely positive since the latter half of 2010, yet tenants remain cautious and the market has yet to fully recover the over 3 million square feet of negative absorption recognized from 2008 to 2010.
Perhaps the most notable event thus far in 2012 has been the relative strength of the recovery in the Financial District, where nearly 1 million square feet of positive absorption has occurred through September 30. While there is still a sizable gap between the vacancy rate in the Back Bay at 9.0% and the Financial District at 16.5%, this began to narrow during the third quarter. Over 370,000 square feet of negative absorption was recorded in the Back Bay, due in large part to the addition of 350,000 square feet of former MFS space at 500 Boylston Street as well as the off ering by State Street Bank of 57,000 square feet for sublease at the Hancock Tower. Given the scarcity of Class A space in the Back Bay over the past two years, this increases options for tenants in the submarket, although asking rents are higher than those in the Financial District.