Grubb & Ellis Q1 Boston Office Market Snapshot
Posted April 4, 2011
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Grubb & Ellis has provided the following brief overview of the Boston Office market following the first quarter of 2011:
- Office vacancy declined 30 basis points from the previous quarter to 14.2 percent in the first quarter 2011.
- The office leasing market posted 904,652 square feet of positive net absorption in the first quarter - the largest gain in more than 30 months. Across all asset classes, Class A product accounted for the bulk of the occupancy gains, posting 758,353 square feet of net absorption.
- Boston Properties delivered Atlantic Wharf, the 21st-largest building in the Financial District at 700,000 square feet. Wellington Management and Wilmington Trust occupied the building upon delivery, with Communispace and Payette Associates slated to move in later this year.
- Despite a 70-basis-point decline in vacancy to 15.3 percent, spurred by new occupancies by ACI Worldwide and PatientKeeper, the CBD continues to outpace the suburbs with a vacancy rate of 12 percent.
- Trends in individual submarkets were mixed. The North 128 submarket experienced its sixth straight quarter of positive absorption, while the beleaguered South 495 market remained the most vacant at 21.3 percent. With an availability rate of 7.1 percent, the Back Bay continues to be the most desired submarket for office space in the region.
FORECAST
- Overall, vacancy will continue to decline minimally throughout 2011 as market demand remains soft. The Back Bay will remain the strongest submarket, while the 495 Belt submarket is expected to continue to struggle.
- Sales volume for properties will continue to increase throughout the remainder of the year as investors increase their appetites for risk and seek out investment opportunities in the form of strategically located, fully leased properties.
- Limited additions to supply, coupled with declining vacancy and availability rates will drive asking rents up slightly as competing landlords look to stabilize rent rolls.
To access the full Boston Office Metro Trends report and other Grubb & Ellis research publications, visit www.grubb-ellis.com/research.
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