Boston Office Market
| Average Asking Rent (Price/SF) | $38.67 |
| Vacancy Rate (%) | 14.7% |
| Net Absorption (SF) | -1,190,235 |
A full year has passed since the COVID-19 outbreak began in the U.S., and Greater Boston fundamentals continued to waver through the first quarter of 2021. Even though the metro’s office sector sustained its fifth consecutive quarter of negative net absorption and vacancies reached an eight-year high of 14.7%, Greater Boston remains one of the nation’s tightest markets. Temporary remote work schemes are still commonplace and weighing on office utilization rates, particularly in the CBD. While tenant activity is improving, demand remains tepid, with limited lease expansions being executed. Overall, landlords have been able to maintain face rents while generous tenant improvement allowances and free rent weigh on net effective rates. Though there are still downside risks to the near-term outlook, optimism is growing in the marketplace now that the vaccine campaign is well underway. Growth in sublease inventories has slowed considerably since late last year; build-to-suit activity in the suburbs and an ever-growing emphasis on lab product are mitigating steep vacancy increases in key markets and multiple office users are beginning to focus on re-occupancy. Boston’s emergence as a global destination for capital, particularly for alternative assets, continues to drive liquidity in the region. During the first quarter, more than $5 billion in office and lab assets transacted here, with investor interest concentrated in the Urban Edge and suburban submarkets.
Download Boston Office Market Report 1Q21Boston Industrial Market
| Average Asking Rent (Price/SF) | $10.86 |
| Vacancy Rate (%) | 5.6% |
| Net Absorption (SF) | 1,355,294 |
Following a flurry of activity at the end of 2020, conditions in Greater Boston’s industrial market continued to improve throughout the first quarter. Total vacancy decreased slightly as another 331,000 square feet of industrial space was absorbed in the first quarter. At just 5.5%, rates have reached a new historic low. The General Industrial subtype experienced an above-average decline in vacancies during the first quarter while rates in the Warehouse/Distribution subtype reached just 5.0%. While leasing velocity is still favorable, the lack of existing availabilities could impact net absorption gains in the near-term and drive tenants to new construction or build-to-suit developments. Overall asking rents ended the first quarter at $10.86/SF NNN, a 14.1% increase compared to year ago levels. Strong investor interest persists within Greater Boston’s industrial market, with more than $730 million in assets changing hands during the first quarter. This represents the third-largest quarterly sales volume recorded in the last 10 years.
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