Boston Sizzles, Suburbs Fizzle, Says Survey

BOSTON-Summer tends to be hottest in the city, and so, too, is the Massachusetts office market recovery, according to mid-year figures released by Jones Lang LaSalle. Boston’s office districts enjoyed positive results in the survey, with asking rents in the Back Bay soaring dramatically, but the suburban sector has recorded more than a half-million square feet of negative absorption to date, following up a tepid opening frame with a second quarter where six of seven submarkets were in the red on absorption.

JLL’s mid-year survey belies industry accounts that the suburban market of 80.3 million sf is engaged in a full-fledged rebound, a notion leading to new construction and a crush of capital chasing suburban properties. Although rents do continue to rise, enticing this week’s groundbreaking on yet another speculative office building in Waltham, the core Route 128/Massachusetts Turnpike that the city anchors actually saw vacancies return to double figures (10.2%) at mid-year after dipping to 9.1% in the first quarter. Save for 259,000 sf of negative absorption for the south region, Route 128/Mass Pike has had the roughest 2007 of any regional submarket, registering minus 172,000 sf of absorption at mid-year. Even so, average asking rents there crested $30 per sf in the second quarter to lead the pack, and the vacancy rate remains the lowest of any submarket despite having the most inventory at 19 million sf.

Boston’s worst performance occurred in the Interstate 495/Mass Pike submarket, with 155,000 sf of negative absorption in the second quarter to edge vacancy for the 12 million sf inventory up to 14.3%. Rents, however, rose slightly from the first quarter, hitting $20.30 per sf from $20.23 per sf. The overall suburban average increased to $21.82 from $21.11 per sf to end the first quarter.