The Suburban Office market held steady in Q3 2016 as new deals coupled with companies continuing to expand outpaced renewals across the various submarkets. While demand felt spotty through the summer months, there are more than 4.3 million sq. ft. of active requirements currently in the market. Not surprising is that demand continues to be driven by TAMI (Technology, Advertising, Media and Information), life science and healthcare companies and less by traditional professional services firms.
The Greater Boston Suburban Office market recorded 30,600 sq. ft. of positive absorption in Q3 2016 and saw vacancy decline by 20 basis points (bps) to 17.4% quarter-over-quarter. The sublease market continued to tick upward, rising another 20 bps quarter-over-quarter, a direct result of several large availabilities (50,000 sq. ft. +) coming to market as firms look at ways to operate more efficiently.
A few highlights from Q3 2016 include:
- In the Metro North, after a rocky start to 2016 with a number of large blocks of space brought to the market, the Route 3 North submarket rebounded for the second straight quarter with more than 58,000 sq. ft. of growth in Q3 2016. ConforMIS will lease 45,000 sq. ft. at 600 Technology Park Drive in Billerica and CaseNet will renew and expand by 11,000 sq. ft., occupying 40,000 sq. ft. at 36 Crosby Drive. The vacancy rate in the submarket is down more than 250 bps since the beginning of the year, ending the quarter at 25.1%.
- Along Route 128 West, Waltham saw a steady stream of sizable activity in Q3 2016 and recorded more than 180,000 sq. ft. of positive absorption. Tesaro finalized plans to renew and will expand while life science companies continue to be active in the Route 128 West region with Biogen leasing 112,000 sq. ft. at 225 Second Avenue in Waltham.
- The Route 495/Mass Pike West submarket was hit the hardest this quarter with three sizeable subleases (Bose – 250,000 sq. ft.; IBM – 88,000 sq. ft.; Clearsult – 52,000 sq. ft.). As a result, sublease availability in the submarket jumped 300 bps quarter-over-quarter to 5.0%.
- The Metro South submarket was relatively level statistically in Q3 2016, recording 25,000 sq. ft. of negative absorption. Batterymarch Park in Quincy continued its strong leasing efforts in 2016 with the announcement that Sentient Jet will relocate its headquarters to 3 Batterymarch Park from their current headquarters at 100 Grossman Drive in Braintree. Steady demand in Quincy over the past year has driven down the vacancy rate 300 bps year-over-year to 13.9%.
If you would like a more in-depth look at the Greater Boston Suburban Office market, please contact Suzanne Duca to receive our Q3 2016 MarketView.