Report: Cambridge Office Rents Will Drop

CAMBRIDGE, MA-Rents for class A buildings in the city’s office market are expected to drop 3% to 5% in 2005, according to Cresa Partner’s third quarter market review. The report indicates that office rates for class B space are likely to remain flat.

Average asking rents for class A offices are now $30 per sf, while class B averages $23 per sf and laboratory space is $46 per sf with sublease rents usually 25% to 50% less. These figures have remained virtually unchanged for the last three quarters.

According to Daniel Sullivan, a Cresa Partners vice president, office rents for class A space will likely drop because most Cambridge property owners, who were hoping for a fast market recovery, are now resigned to a very slow process. “It’s now more cost effective for landlords to discount their space and retain tenants than it is to lose those tenants and carry the vacant space as a liability,” he says, adding that many companies in Cambridge will likely find flat rents in “class B+ or A-”, quality buildings that may offer fewer amenities.