The Boston office market continues to evolve. In a cycle where the growth has been dominated by TAMI (technology, advertising, media, and information) companies, conventional real estate wisdom has been thrown out the window. Class B has outperformed A, the Back Bay is lagging behind the Seaport and Financial District, and high-rise space doesn’t hold the clout it used to. And following the recent trend of ups and downs, 2017 has started out on the right foot, with more than 400,000 SF of positive absorption.
The Cambridge office and lab market is softening. Both direct and total vacancies increased over the quarter, and more than one million SF of sublease space is available, which hasn’t happened since 2004. In all, vacancies moved up to 7.4% to start the year, a 3.0-percentage-point jump from the previous quarter and a similar increase from one year ago. It was hard to imagine the market getting any tighter than it was in the third quarter of 2016, leaving vacancies nowhere to go but up.
Reebok’s impending move to the city, and a large Bose sublease shook market fundamentals at the start of the year. Absorption was generally negative across the suburban market in the first quarter, with only the Inner Suburbs posting positive figures. Sublease space increased quarter-to-quarter but is down slightly in the past year. Those trends, however, do not hold in all submarkets. Waltham, in the Route 128 Mass Pike Submarket, has more sublease space on the market today than at any time since 2003 after the dot-com bust.
Disclaimer: The data in this report reflects recent organizational changes to our historical time series. This report represents the Class A and B office and lab market. R&D properties are now divided into lab, which remains in this series, and flex, which will be found in the industrial series. Due to changing market dynamics, the Allston/ Brighton submarket was moved from the Inner Suburbs to its own submarket within the Boston framework, while Framingham and Natick are now part of the Route 495 West submarket. Please keep this in mind when comparing information in this report with previously published statistics. Historical comparisons will now reflect the new classifications and submarket boundaries.