Suburban Office Vacancy Rate Hits 20%
Vacancy among office and research and development space along Interstate 495 hit 23.7 percent during the first quarter, according to a market report from Boston commercial real estate firm Colliers Meredith & Grew.
The vacancy rate for suburban Boston overall was 19.1 percent during the quarter. Worcester’s vacancy rate was 11.5 percent.
Colliers said it expects the vacancy rate for suburban Boston to top 20 percent this year as 1 million square feet of new construction hits the market in the next 12 to 18 months.
Rate Regression
Rental rates have softened and hovered around $18 per square foot along I-495 during the quarter. On average, current lease agreements are being executed on rental rates 10 to 15 percent less than a year ago as landlords become aggressive in securing tenants to ward off vacancy and tenants take the opportunity to secure favorable lease rates.
The amount of space available for sublease has increased for three consecutive quarters as companies layoff employees and vacate offices. Colliers said space available for sublease has increased by 20 percent over the last 12 months.
During the quarter, 850,000 more square feet of suburban office and R&D space was vacated than was leased. Nearly 300,000 square feet of that space is now available for sublease.
Only Boston’s inner suburbs finished the quarter with a vacancy rate less than 10 percent.
Office and R&D space along Route 128 was 17.1 percent vacant and saw 913,000 more square feet of office space became vacant than was leased during the quarter.
Still, the suburban market is in better shape than it was during the tech bust in 2001-02.
During that year, 11.6 million square feet of sublease space became available. At the end of the first quarter, 3.6 million square feet of suburban space was available for sublease.
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