Boston is on fire. Tenant demand remains off the charts, companies keep flocking to the city, and Class A rents are poised to pop. Market momentum has shifted firmly to landlords, as large blocks of space are dwindling – tenants that want a big block of space are generally looking to new construction – and big announcements keep coming. Employers want to be here, and that has landlords repricing vacant spaces and a few developers ready to break ground on spec construction.
Cambridge started the year with more than 130,000 SF of absorption. This is impressive given how tight the market is overall, with vacancies now under 4%. It’s difficult to find space, and unless there is substantial tenant movement, absorption is hard to come by. Tenants need to get creative to find space, part of the reason that incubators and shared space are so popular today. And when space does come to the market, it doesn’t last long.
Boston’s suburbs started out the year with gains: 257,000 SF of positive absorption, with strong growth in the Inner Suburbs, Route 128 Northwest, and Route 495 West. The Route 128 Mass Pike market posted negative absorption, along with the POST (200 Smith), a 430,000 SF asset, coming on line vacant caused vacancies to inch up over year-end figures. Meanwhile, weighted-average rents in the suburbs continue to rise.