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Boston Area Office Market Report for Q3 2021

Overview

In the Boston office market, absorption has turned positive after five consecutive quarters of negativity. Such low absorption has not been seen since the global financial crisis. With a supply pipeline booming at levels not seen in two decades, inflated levels of sublease space, and lingering uncertainty regarding companies' return-to-office policies in the face of the latest pandemic development, the Boston office market will likely see several quarters of rising vacancy rates and essentially flat asking rents.

Since office construction levels in the Boston metro area are the highest since early 2001 and sublet availability is rising, projects with minimal preleasing could struggle to secure tenants in the current leasing environment. Looking ahead, new high-quality assets with next generation ventilation and air filtration systems may see stronger demand as office tenants put a premium on employee safety.

Sales volume in 21Q1 broke a record, hitting a new high of $4.9 billion. However, sales for the second quarter were below the market's 2017–19 second-quarter average. While 4 & 5 Star assets are trading this year at above pre-pandemic prices, average prices for other property classes currently sit below 2019 levels

 

 

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Information provided by CoStar.com

 

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