- Top-end buildings are benefitting from a continued flight to quality.
- Metrowide office vacancies increased for the second consecutive quarter, to about 16.3%.
- Vacancies ticked up in Boston, Cambridge and the Suburbs.
- More than 1.1 million square feet of sublease space has come to market so far in 2022.
Headwinds to office market growth persisted into the third quarter. High inflation, increasing interest rates, and falling stock prices have dampened the outlook for business investment. Numerous companies have announced layoffs in response to current economic trends, and more are likely to do so in upcoming months. Many firms are also reducing their office footprints to better align with emerging in-office work patterns. These factors contributed to metro Boston’s negative net absorption and vacancies rising to 16.3%.
Counterbalancing trends could offset some of the negative impact on market fundamentals. The number of office-using jobs in the Boston metro is at a record high, and monthly gains in those jobs have persisted. Venture capital/pre-IPO funding into non-biotechnology Massachusetts-based companies remains healthy — more than $11 billion in the first nine months of the year — and can help support growth. Also, completed office-to-lab conversions can help bolster office market fundamentals in submarkets across the metro.