Boston Office Market
| Average Asking Rent (Price/SF) | $43.46 |
| Vacancy Rate (%) | 14.4% |
| Net Absorption (SF) | -264,605 |
The Boston metro area’s office market recovery continues to vacillate in concert with macroeconomic uncertainty across the country. Following several quarters of positive momentum, Greater Boston’s office fundamentals softened slightly as recessionary pressures have risen and the once-booming tech and biotech sectors are facing corrections. An uptick in sublease space resulted in negative net absorption during the second quarter of 2022, and the metrowide vacancy rate increased by 30 basis points. Sustained inventory contraction due to redevelopment pursuits continues to remove vacant office space from competitive stock; on a more positive note, headwinds in the life science sector could curtail future pipeline projects by upwards of 65%. Tenant activity suggests demand-side challenges will persist in the near term as expiration-driven leasing, renewals/extensions and right-sizing exercises are expected to drive transactions in the local office market, rather than tenant growth. Tumult in the financial markets has rippled through the tech industry, which is now experiencing layoffs, limited exit strategies and more measured venture funding. With that, tenants that are transacting remain attracted to quality office product. In the CBD, new construction is dominating user preferences. Office occupiers are contending with an overhanging sluggishness in return-to-office momentum, while the long-term impact of flexible hybrid schedules lacks clarity. Although inflation and rising interest rates are weighing on investment sale volumes, a handful of life science-related transactions closed in recent months.
Download Boston Office Market Report 2Q22Boston Industrial Market
| Average Asking Rent (Price/SF) | $13.21 |
| Vacancy Rate (%) | 3.0% |
| Net Absorption (SF) | 723,952 |
Greater Boston’s industrial market fundamentals remained healthy throughout the second quarter of 2022. Overall asking rates consistently reach historic highs, ending the quarter at $13.21/SF NNN. The General Industrial and Warehouse/Distribution asset classes led the trend, with average asking rents achieving $11.56/SF NNN and $13.07/SF NNN, respectively. Strong leasing activity caused net absorption to remain positive for the 17th straight quarter, closing the second quarter of 2022 at 753,952 square feet. Demand continues to keep pace with supply in the industrial market, as vacancy rates matched a previous low of 3.0%. The flight-to-quality warehouse space is a recurring market trend, with overall Warehouse/Distribution vacancies and Class A Warehouse/Distribution vacancies also dropping to historic lows of 2.1% and 1.4%, respectively. Despite macroeconomic headwinds and overall market uncertainty, investment in industrial properties yielded $823.4 million with an average sales price of $245/SF. While supply chain disruptions and construction delays persist, some developers have started to demise space to meet the demand of smaller users.
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