Boston ends 2018 by setting records. Class A rents have never been higher, topping $63/SF at year-end, while Class B rents crested at $50/SF in aggregate for the first time ever. Tenant demand remains incredibly strong, large blocks of space are hard to come by, and our tech scene—despite the lack of Amazon’s HQ2—remains in high gear. Out-of-market tenants continue to look and lease space in Boston, and Cambridge-based firms are driving recent Seaport leasing. Vacancies ended the year at 9.2%, a 1.4-percentage-point improvement from 2017, and well below the long-term average vacancy of 10.8%.
Cambridge posted nearly 900,000 SF of absorption in 2018, leaving vacancies at 3.8%, down 0.5 percentage points from the end of 2017. While this rate is up from the third quarter, that is largely because of 35 Cambridgepark Drive, a new lab building across from the Alewife T station anchored by Ribon Therapeutics and Eisai. The completion of 399 Binney (Rubius-anchored), and 121 First Street (CarGurus) helped propel absorption this quarter.
Vacancies haven’t been this low in Boston’s suburbs in more than a decade. At 16.6%, they’re back in line with their long-term average, which is weighted lower as a result of the low vacancy era of the 1990s. Absorption has been positive for seven straight quarters. Growth has been widespread, with nearly all submarkets posting absorption gains year-over-year.