Boston MA – The Greater Boston office market ended 2009 with little to cheer about. With the economy remaining weak and unemployment stubbornly high, many companies were reluctant to make a move.The majority of leasing activity was from lease renewals, with landlords making aggressive deals to keep existing tenants in place. As a result, net absorption was negative in most submarkets as more space became available, and the supply of sublease space increased.
Vacancy rates for class A&B office space in Downtown Boston increased to 9.7%, with average asking rents dropping to $34.48 per square foot. Net absorption for the year was a negative 863,300 sq. ft.
The suburban market took the biggest hit with vacancy rates increasing to 15.4% at year end, compared to 11.2% at the end of 2008. Average asking rents decreased to $21.66 per sq. ft. In addition, the Suburban office market finished the year with a whopping 1,712,200 sq. ft. of negative net absorption.
Although this may sound like bad news, if you are a tenant with a lease expiring over the next 2 years, this is actually good news. Now is the time to take advantage of a competitive market to re-negotiate or extend your existing lease, and reduce your occupancy costs. Given the current market conditions, it appears tenants will be in a favorable position for the remainder of 2010.