BOSTON-Cassidy Turley Tuesday released its Q3 Marketwatch research that tracks the performance of the commercial real estate market in Boston, Cambridge and the suburbs. Third quarter figures indicate that while fundamentals in Boston and Cambridge remained level, tenant demand in the suburbs is rapidly gaining strength– resulting in the lowest availability rate the suburban office market has seen since the first quarter of 2009.
Downtown Boston posted negative absorption for the third consecutive quarter, as did the laboratory market in Cambridge. While larger deals of 50,000 square feet and up are being executed in these markets, several significant availabilities that came online earlier in the year—such as First Marblehead and MetLife in Boston; Vertex Pharmaceuticals in Cambridge—are what is keeping the market in check. This balancing act is largely the result of the continued rightsizing of professional service firms coupled with the appreciable growth of technology and life science companies, the report states.
Meanwhile, the story in Cambridge has been about escalating office rents—especially in Kendall Square—but the third quarter brought them to a halt; at least temporarily. Overall Cambridge office rents are down 4.6% quarter-over-quarter. And, for the first time since the beginning of 2009, East Cambridge office rents have flattened –declining 50 basis points since mid-year.
In the suburbs, 495 North and 128 Central accounted for the majority of market activity, for the second consecutive quarter. Methodical expansions continue to drive leasing activity in both submarkets – leading to a notable decline of large, contiguous blocks. Yet as these companies continue to stack more people into fewer square feet, suburban parking needs are increasing, the report says. All of this is creating a surge in build-to-suit activity. While speculative construction is likely a thing of the past, large suburban tenants with specific requirements are beginning to turn to new construction to accommodate their needs.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
