The Route 128 South office market has never been an area of high rents or low vacancy rates, but lately, there have been signs of life after the bloodbath that occurred during the recession.

In the first quarter of the year, there was about 187,000 square feet of positive absorption in the market. In the past three quarters, there has been a total of 260,000 square feet of positive absorption, something unheard of for years in the market, according to information from Richards Barry Joyce & Partners. It’s also the first time in three quarters that the vacancy rate has dipped below 20 percent, currently hovering at 19.5 percent.

The past quarter’s good news was led by LoJack Corp. The company consolidated its Massachusetts operations into Tweeter’s former 63,000-square-foot headquarters at 40 Pequot Way in Canton, taking the entire building. The property has been vacant since the Tweeter home electronics chain went belly up in 2008.

Two Forward, One Back

But rents haven’t risen, despite the statistics. In fact, on average, asking prices for office space have dropped roughly a dollar per square foot, according to a quarterly report from Lincoln Property Co.

And some landlords, including A.W. Perry, haven’t sealed a South Shore office deal in the last year, said Richard Beal, president of Perry Brokerage Services, an offshoot of A.W. Perry, despite offering free rent and significant tenant improvement (TI) packages.

"The deals we’ve seen in comparable properties have been in the upper teens, maybe up to $21 or $22 a square foot for a five-year deal," Beal told Banker & Tradesman. "But there’s still plenty of free rent and substantial TI money to be had from landlords. But we have seen more traction lately, more people out kicking tires considering new space. But we’re seeing people go especially to properties with more public transportation, like in the Braintree area."

But in general, even the most popular Rt. 128 South office communities – places like Quincy and Braintree, the ones with MBTA access – don’t really heat up or cool down too much, even with competitive pricing and hefty landlord concessions.

And that’s a reality that might be hard to swallow for the owners of properties with some of the largest vacancies in the entire market.

Those include properties like One and Two Heritage Drive in North Quincy, owned by Newton’s CommonWealth REIT, where about 175,000 and 186,000 square feet, respectively, are sitting vacant. ING Financial Services jumped ship last year on 175,000 square feet it occupied at One Heritage Drive, after leasing 104,000 at the new Braintree Hill Office Park property built by The Flatley Co. Boston Financial Data Services vacated 186,000 square feet at Two Heritage Drive.

Back Office Blues

"Historically it’s always been a back office market and an economic option for companies looking to reduce costs," said Sean Teague, principal with Cassidy Turley FHO. "It was well suited to financial services companies in the past. Recessions would happen and vacancies would shoot up out there. But then the economy would come back, rents in Boston would be driven higher, and companies would look back to the South Shore for value."

But in the last recession and with the full force of globalization, a lot of back-office jobs were off-shored or sent to other locations around the country. A lot of companies reduced their footprints and are now operating leaner, doing more work with less people thanks to technology upgrades. Cubicles are smaller, offices are smaller and more employees work from home. And brokers said they are wondering if users will ever find a need for all that empty office space on the South Shore.

And while some brokers view the rising rents along Rt. 128 Central in Cambridge and in Boston – attributed largely to technology firms and life sciences companies – as a sign that the dominoes might be pushed toward the Rt. 128 South market, none of those firms have committed to moving to the South Shore.

And much of the reason why has to do with the fact that once you get outside the split between Interstate 93 and Route 3, public transportation is very limited, if it exists at all, Beal said.

And while there has been an uptick in velocity, especially for the 1,500- to 3,000-square-foot deals that are slowly chipping away at space, there just aren’t any major deals on horizon that will move the vacancy meter, said Sean Lynch, vice president with Jones Lang LaSalle.