October 8, 2020
With a third consecutive quarter of negative net absorption, vacancies in Boston’s office market have climbed 120 basis points over the quarter, to a seven-year high of 13.5%, according to Newmark Knight Frank’s Boston Office Market 3Q 2020 report.
With uncertainty prevalent in the marketplace, many tenants remain cautious in their decision making, according to NKF. Year-to-date leasing velocity across the metro is off 67% compared to 2019 levels and the average lease term declined by nearly 10% over the course of 2020. Physical occupancies also remain limited, particularly Downtown Boston, as the list of companies delaying their return to the office has grown.
Performance in the third quarter was among the worst the Greater Boston office market has ever experienced, reports NKF. Although restrictions on the local economy have been rolling back for several months, the recovery has been sluggish. NKF projects that availabilities, particularly those among sublease spaces, will increase in the coming quarters as companies continue to evaluate space needs. NKF also expects asking rents to begin to ultimately soften as well.
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