"Rents have really spiked during the last 12 months," concurs Meredith & Grew research director Mary Kelly. And while cautioning that, "you can't just will rents up by asking," Kelly tells GlobeSt.com there have been some leases struck recently that did achieve $40 per sf, and she predicts more will follow as the year progresses.
"Landlords are being aggressive," she says, and for seemingly good reason given various first quarter reports putting the office vacancy rate in Cambridge around 10%.
RBJ found a 9.7% vacancy for Cambridge overall, similar to the 9.5% recorded by Cushman & Wakefield, whereas Jones Lang LaSalle shows a 7.3% mark. The RBJ survey covers 13.1 million sf, compared to 16.1 million sf for JLL. No matter what the sampling, all reports showed tighter conditions throughout Cambridge, a trend RBJ president Robert Richards attributes to the combination of an improving economy and the reduced inventory of space. "This is probably the hottest submarket in Greater Boston right now," says Richards, a specialist on the Cambridge market.
Net absorption was somewhat tepid for the quarter, with Meredith & Grew's estimate of 93,000 sf the highest among the surveys reviewed. JLL was just under 90,000 sf and C&W put the figure at 82,000 sf. RBJ, which separates office from lab activity, had 64,000 sf of net absorption in the former and 115,000 sf for the latter. Over the past four quarters, Cambridge has seen 601,000 sf of net office absorption and 856,000 sf of net lab space absorption, RBJ also revealed.
Even though office rents are recovering to levels not seen since before the recession that rocked Cambridge in 2001, Richards says he believes office space will still be converted due to the higher rent levels that can be achieved on the laboratory front. Such space fetches upwards of $70 per sf in Cambridge's core Kendall Square district. More than 600,000 sf has already been changed over to lab, and Alexandria Real Estate Equities is currently taking that path for 177,000 sf at 200 Technology Square, an asset included in the complex acquired last year from the Massachusetts Institute of Technology.
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