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Q1 Report Anticipates Continued Flat Market

BOSTON-Cresa Partners in Boston's first quarter market report indicates that the city's office market--where vacancy rates are about 17%--will likely remain flat through the rest of the year. Blame for the situation is placed on the employment numbers which have yet to experience a significant increase.

By Naomi Grossman | Updated on April 15, 2004

BOSTON-While employment numbers are rising nationally, the local scene tells a much different story and it is that fact that is convincing local brokers that the area’s office market will remain flat for the rest of the year.

“The key economic drivers in Downtown Boston are the financial services and insurance industries, and until they start adding jobs, the commercial real estate market will remain flat,” says Joseph Sciolla, managing director of Cresa Partners in Boston, a corporate real estate advisory firm that specializes in tenant representation. He adds that Bank of America’s and Manulife’s recent acquisitions of Fleet and John Hancock have resulted in workforce consolidations and the addition of more than 300,000 sf on the market. Contributing to the area’s instability, notes Sciolla, are the widening mutual fund scandals, with MFS and John Hancock joining Putman on the list of companies under investigation.

Cresa Partners’ first quarter market report indicates that the city’s vacancy is hovering at 16% to 17%, with rents for class A and class B buildings actually dropping a dollar this quarter, to $40 and $24 per sf, respectively. In South Boston, Cresa reports that the development frontier remains in flux, with three parcel owners seeking buyers. Tishman Speyer has broken off negotiations with Boston Wharf to purchase 44 buildings; the Pritzker family wants to sell its Fan Pier site; and Frank McCourt, the new owner of the Los Angeles Dodgers, continues to seek a buyer for his land parcel.

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