Colliers International Boston is pleased to release the Third Quarter Market Viewpoint including commentary on the greater Boston office and R&D markets as well as notable sales transactions and a "Spotlight on Construction" focusing on the city’s transformative development.
The DOWNTOWN BOSTON market continued to exhale after tenant movement in the third quarter. Vacancies moved up to 11.1%, a 0.7-percentage-point increase from the past quarter and more than two percentage points from the cyclical low set at the end of 2015. This slowdown was not unsurprising: tenants continue to shuffle space, as tenant migration to the Seaport is having long-lasting impacts on other submarkets within downtown.
The CAMBRIDGE office market is essentially full. Tenants continue to fight for space, as the few options that remain are flying off the market. Vacancies remain near record lows, and developers cannot bring space to the market fast enough. Owners continue to convert offices to lab space to tap into Cambridge’s world-leading life sciences and R&D status, not to mention capturing higher rents. Plans are emerging for more construction, though that product is still several quarters away.
The SUBURBAN market led the overall Boston market in absorption again in the third quarter. New build-to-suit construction was a major factor, as Partners Healthcare in Somerville, Wolverine Worldwide in Waltham, and the FBI in Chelsea all took occupancy in the quarter. Absorption topped 1.5 million SF, only the fourth time it has crossed the million SF mark so far in this real estate cycle.