Newmark Group
Update
10/20/21
Newmark Releases Q32021 Boston Office Market Report
While one quarter certainly doesn’t make a trend, the Greater Boston office market posted positive fundamentals for the first time since the start of the pandemic. Vacancies declined 50 basis points over the quarter as more than 300,000 square feet of office space was absorbed. Sublease inventories are abating as well, decreasing by more than 1.0 million square feet in the third quarter. Tenant activity is picking up, despite uncertainty surrounding flexible work arrangements and recent commitments from homegrown tech companies, including HubSpot and Pegasystems, point to the continued need for physical space among office users. Asking rents are trending upward across the metro, surpassing $40.00/SF for the first time, while growth in effective rates still lags. The impact of the region’s booming life science sector on and the interplay with the local office landscape cannot be emphasized enough. With laboratory demand inundating the marketplace, developers remain focused on purpose-built space as well as conversion projects, resulting in another 1.4-million-square-foot reduction in the metro’s office inventory, nearly all located in Boston’s suburbs, in the third quarter alone. Boston’s emergence as a global destination for capital, particularly for alternative assets, continues to drive immense liquidity in the region, as well. Overall, Greater Boston’s office market is heading toward more normalcy, despite current challenges from COVID-19 variants and delays in return-to-office plans. However, expectations for an uneven recovery remain high and more stable market conditions may not take hold until at least 2022.
