"Absorption in 2006 was less than in 2005 but its still a very healthy number and it represents significant growth," Mary Sullivan Kelly, chief research officer for Meredith & Grew, tells GlobeSt.com.
Boston came out the big winner in the absorption race, logging nearly 1.5 million sf for the year and marking the fourth consecutive quarter of positive growth. In 2005, two million sf of space was absorbed in Boston. The city's 2006 overall vacancy rate also showed significant improvement, declining to 11%, more than two percentage points over 2005's rate of 13.3%.
The suburban market, including Cambridge, followed that trend with more than 2.1 million sf of positive absorption for the year, less than half of the amount of space absorbed a year earlier.
The results were particularly strong in Cambridge where one million sf of space was absorbed in 2006 and vacancy dropped from 15% to 11.9%. In the suburbs, where nearly 1.3 million sf was absorbed, vacancy rates dropped from 21.1% to 20.5%, a sign, Kelly says, of improving suburban demand.
All this market tightening bodes well for landlords as rents trend upward but tenants could soon feel the squeeze as available space, particularly in class A locations, grows scarcer as the economy continues to improve, she notes.
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