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First Quarter Market Results Are Not Promising

BOSTON-One analyst anticipates about 200,000 sf of space returning to market, which will drive up vacancy rates. Nonetheless, the local market is in good shape and is expected to improve slowly after the summer.

By Naomi Grossman | Updated on April 16, 2001

BOSTON-For the first quarter of 2001, the commercial real estate market here could end up being slightly negative according to Stephen Coyle, director of market research for Portfolio & Property Research, a local real estate research consulting group. Coyle tells GlobeSt.com that his firm anticipates approximately 200,000 sf more space returning to the market than is leased. As a result, vacancy rates here will go up.

“Most of this space is from tech firms,” notes Coyle. “But other firms like Cabot and Putnam [a financial services company] will probably be giving up space and that could impact the market.” While most of the space from high-tech firms that is going on the market is sub-lease space–which usually does not impact the market–much of the square footage being put up now have long lease terms left.

The flip side is that these leases can present an opportunity to property owners if they were signed before the rates skyrocketed. “If these leases were signed two years ago when rates were lower,” says Coyle, “owners can, in some cases, make money.” But, continues Coyle, if the leases were signed in the fourth quarter of last year, rents are going to be lower now. “Highest class A space rents are going down,” he points out. “Many folks are waiting to see how low they will go.”

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