The Boston Metro office market closed 2022 with a turbulent fourth quarter, hitting a record vacancy rate of 17.4%. According to data from Collier’s, Boston had 369,000 square feet of negative office absorption in the fourth quarter of 2022 alone. For the year as a whole, Boston had 1.4 million square feet of office space available, reaching the highest level in 20 years.
The extent of negative absorption took analysts by surprise, as the office sector displayed signs of a comeback during the first half of 2022. However, rising interest rates and concerns about a potential recession put the brakes on leasing activity in the waning months of the year. Meanwhile, back-to-the-office campaigns by major employers are moving more slowly than expected.
To be fair, the broader economic concerns have hit many U.S. cities harder than Boston. Chicago’s office vacancy rate stood at 21.4% for the fourth quarter of 2022, an all-time high for the Windy City. Houston’s office vacancy rate stood at 21.3%. In many cities, Class-A buildings are weathering market conditions better than Class B and C.
Subleasing activity has increased in the Boston Metro as companies adjust to changing business conditions. According to CBRE, about 4.7% of all office inventory is currently in the sublease market. This is the highest level of sublease space since 2001. For those in Class-A space, it may pay off; tenants seem to be trading up, even as they reduce square footage.
In recent weeks, Boston Metro office space absorption has ticked higher, and there is hope that the office sector has already reached bottom. Tenants who are seeking office space in the area should take advantage of current conditions! Be sure to download our free Tenant Leasing Guide and contact us about tenant representation.
When you are ready to begin, relocate or expand your business, team up with the Jay Nuss Realty Group, LLC! Whether you are thinking of buying, leasing, or investing in Boston Metro commercial real estate, we can help you find the ideal property!
Contact us today for expert guidance!