Summer of 'Disconnect' Hits Cambridge Market

CAMBRIDGE, MA-During a forum yesterday at Le Meridien Hotel assessing this city’s 20-million-sf commercial real estate market, Colliers Meredith & Grew broker Joseph Flaherty wondered aloud why a full-floor office option he is marketing in Kendall Square has received scant traffic in recent months. With just five such choices in the core business district, Flaherty told an audience of 200 that he–and the landlord–anticipated a robust response once it came available, yet to date, that has not been the case.

“Because of the overall economy, tenants are being very cautions,” relayed Flaherty, adding, “There is a big disconnect where people seem to think everything is falling apart.” Opening the CM&G-sponsored program, Flaherty said many tenants fail to recognize the solid fundamentals of Cambridge and its dearth of space, especially for class A buildings in Kendall Square, a constituency whose vacancy rate is a thin 5.8%. “It’s very tight right now,” Flaherty said. “If you are a tenant wanting to stay in (Kendall Square), you’re probably going to have to look at a build-to-suit.” That is especially true, he explained, for companies needing more than one floor, such as Forrester Research, out looking for 200,000sf.

Flaherty was joined at the Cambridge overview by CM&G investment chief Lisa Campoli and former company staffer Daniel O’Connell, now the state’s Secretary of Housing and Economic Development in Governor Deval Patrick’s administration. The guest speaker noted that he grew up a few blocks from the event in a three-decker, back when Kendall Square was a blighted industrial district bereft of the global pharmaceutical and technology companies there today–a “super-cluster” O’Connell cited as a key reason that the new economy “augers well for Cambridge.”