Key Takeaways
- For the first time in a year, office availability in metro Boston increased, ending 22Q2 at 15.9%.
- Tenant demand for high-quality space is driving strong preleasing in new construction.
- Life science conversion activity is having a positive impact on fundamentals across the metro.
Macroeconomic factors such as high inflation, rising interest rates and falling stock values are impacting the local economy. Given that backdrop, for the first time in a year, in the second quarter the Boston metro had negative net absorption and rising availabilities. Despite the headwinds, the mid-year availability rate of 15.9% remains below the metro's historical average.
Occupancies were the most impacted in Boston, where a significant amount of sublease space came to market. As firms show a preference for higher-quality space, in Boston it has been the Class B segment that has experienced the most disruption. Class B availabilities there are near record-high levels. However, with tenants seeking more than four million square feet of space in the market in Boston, there are opportunities to fill empty space. Cambridge and the Suburbs both had increases in occupied space in 22Q2. Office-to-lab conversions are bolstering office market fundamentals across the metro.
