Office vacancy rates decrease, construction increases
Quarter 4 figures are out and Boston’s office market ended the quarter with a vacancy rate of 9.9%. The vacancy rate decreased from 10.2% during quarter three, indicating a higher demand for office space in the Boston area. In the first quarter of 2012, vacancy rates stood at 10.8% and have continued to decline steadily since. In particular, Class A project experienced a significant decrease of .5% in vacancy between the third and the fourth quarter.
The graph above depicts trends in vacancy rates in recent years. As you can see, rates have been decreasing since mid-2011. However, the vacancy of subleased space increased to 1,599,609 square feet in the Boston area. On the whole, Boston vacancy rates are nearly 2% lower than the U.S. average.
Rental rates decreased to $20.26 per square foot in the fourth quarter, down 0.9% from $20.45 in the third quarter. Average asking rental rate in the central business district (Class A) was $32.98 while suburban markets averaged $19.44.
Nine buildings totaling 515,670 square feet were delivered to the market in the fourth quarter and the quarter ended with 5,612,898 square feet of construction underway. This marks a 29.82% increase from the previous 397,222 square feet developed in Q3.
Source: CoStar Office Report