Boston Office Market
|Average Asking Rent (Price/SF)||$42.05|
|Vacancy Rate (%)||14.2%|
|Net Absorption (SF)|
Greater Boston office fundamentals have improved from one year ago, with deal momentum picking up. However, office leasing activity remains a fraction of pre-COVID levels. Build-to-suit activity, again, represents a majority of the positive net absorption reported during the quarter and improvements in sublease inventories have stalled. Sustained inventory contraction due to redevelopment pursuits resulted in lower vacancy, specifically within the suburban office markets. Average asking rents increased modestly over the quarter, while concession packages and tenant improvement allowances are resetting at higher rates. Tenants are flocking to quality office product and in the CBD, new construction is dominating user preferences. Cambridge Associates, Eaton Vance, K&L Gates, Intersystems, Goulston & Storrs and IRM have executed or are close to executing leases within new CBD developments. The impact of the region’s booming life science and logistics sectors on the local office landscape cannot be emphasized enough. Since the end of 2019, the repositioning of office assets for laboratory and industrial uses has resulted in a net inventory reduction of more than 6.5 million square feet in select submarket across the metro area. Displaced office tenants now have fewer space options, which is already benefiting select existing assets in nodes with significant laboratory development. Despite volatile public health conditions early in the first quarter, all metrics are pointing toward a slow and steady increase in workers returning to offices.
Boston Industrial Market
|Average Asking Rent (Price/SF)||$12.87|
|Vacancy Rate (%)||3.1%|
|Net Absorption (SF)|
Greater Boston’s industrial market fundamentals remained sturdy, moving through the first quarter of 2022. Overall asking rates remain on an upward trajectory, increasing more than 3.5% from the fourth quarter of 2021 and 9.5% compared to a year ago, finishing the quarter at $12.87/SF NNN. Industrial vacancies declined for the sixth consecutive quarter, reaching a new historic low of 3.1%. The demand for quality industrial space combined with nationwide supply shortages indicate that vacancy rates will continue to decrease in the near term. While there were several sizeable leases inked in the first quarter, led by Crane Logistics and Wayfair, the scarcity of warehouse space caused positive net absorption to fall below one million square feet for the first time in three quarters, with roughly 650,000 square feet of positive net absorption in the first quarter, compared to 1.7 million square feet of absorption during the fourth quarter of 2021. The General Industrial and Warehouse/Distribution subtypes each experienced a 30-basis-point decrease in vacancy rates compared to fourth-quarter levels, falling to 2.7% and 2.5%, respectively. The first quarter of 2022 marked the first time that General Industrial vacancy has dropped below 3.0%. Investment in industrial properties yielded $632.0 million with an average per-square-foot sales price of $248.
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