Route 128's Vacancy Rates Shoot Up

WALTHAM, MA-The office market of the Route 128 area–which includes this town and stretches from Lexington to Needham–is showing increasing signs of vulnerability as its vacancy rates continue to rise and its rent continue to fall. A local broker tells GlobeSt.com that relief is not around the corner.

Michael Frisolli, a founding partner at Richards Barry & Joyce notes that the vacancy rates in this area will hit 19.5% for the fourth quarter of this year as compared with a vacancy rate of 6.9% for the fourth quarter of 2000. “That is a significant jump in vacancy rates,” he says, pointing out that those rates have been climbing throughout the year. The first quarter of this year saw a 7.69% vacancy rate here while the second quarter that number was up to 12.4%. By the third quarter, vacancy rates here were 15.4%. The availability rate looking out over the next 12 months will be 24.5%.

Frisolli says that sublease space continues to be the driving force behind the rising vacancy rates. “In the fourth quarter there was a 35% increase in sublease space alone,” he says. “Direct space saw a 20% increase.” In addition, adds Frisolli, things are not going to look up for a while here. “We think the market has not settled yet. It will get worse before it gets better,” he says, although he adds that the lack of demand makes it difficult to determine when the market has hit bottom…