Office vacancies up in Worcester, Westborough, Natick, Shrewsbury
SAM BONACCI
The downtown Worcester office towers at 100 Front St. (left) and 120 Front St.
Office vacancies in Worcester increased slightly in the third quarter, but that didn’t stop rents from rising, according to a report from CoStar Group, a Washington, D.C.-based real estate tracker, with offices in Boston.
The nearly 11-million-square-foot Worcester office market saw the vacancy rate grow to 6.2% from July through September, up from 4.9% for the same period a year ago.
But as more offices went empty, rents swelled by 12.6% to $22.53 per square foot, compared to $19.99 one year ago.
Peter Kovago, a principal of NAI Glickman Kovago & Jacobs, a Worcester-based commercial real estate firm, said a 1.3 percentage point rise in vacancies is insignificant.
“Vacancies are basically flat and remain very low, especially for the better space,” Kovago said. “We’ve definitely seen a rise in pricing driven by the buzz generated by what’s going on downtown.”
The other factor driving rents, he said, is several buildings have undergone major renovations including 100 and 120 Front St. and the same is expected at 126 Main St.
“Construction costs have gone up over the years, and landlords have to charge more rent; and that’s pushed everyone’s rents up,” Kovago said. “That’s a positive thing. If rents don’t rise, landlords will not improve their spaces.”
It was the same story in Natick, Westborough, and Shrewsbury.
In Westborough, the third quarter vacancy rate in the 4.3-million-square-foot office market rose to 18.2%, up from 16.9% for the same period one year ago. At the same time, rents rose slightly to $19.09 per square foot from $18.99.
Natick’s 2.8-million-square-foot office market saw the vacancy rate rise to 3.7% in the third quarter, up from 2.5% last year. Rents reached $19.75 per square foot, up from $17.75 in the third quarter of last year.
Shrewsbury’s small office market of about 250,000 square feet also saw vacancies and rents rise. The vacancy rate was 3.7%, up from 2.5% in 2018. Rents averaged $20.48 per square foot in the third quarter from $18.35 one year ago.
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