Boston’s sizzling office market is hitting new temperatures, with the city’s corporate towers now sporting the third-hottest office rents in the country, a new report finds.

In some of the Back Bay’s top towers, rents are even shattering the $100-per-square foot mark, Colliers International noted in its first quarter survey of the nation’s top office markets.

But as office rents soar and the amount of space available for rent dwindles in downtown Boston, it begs the question, at least for a glass-half-empty guy like me, of just how much longer this party can go on for before fizzling out.

If you had asked me in December, when the stock market was in the tank and a full-blown recession seemed ready to hit, I would not have been so sanguine.

However, nearly six months later jobless rates are hitting historic lows and companies are still hiring away. And the commercial real estate market in Greater Boston – and for that matter across the country – is showing no signs of faltering.

Yes, cyclical impermanence is baked in the very nature of the modern economy.

But here’s betting the commercial real estate party in Boston, and for that matter across the U.S., still has some legs, enough to carry it another two or three years.

“Many companies have spurred new building projects recently directly tied to new hiring expectations,” said Brendan Carroll, director of intelligence at Boston-based Perry Brokerage Associates. “The best recruits come to Boston and may visit with Akamai, Amazon and Google if they’re techies, and Foundation, Sanofi and Takeda if they’re ‘labbies.’”

Rents on the Rise

Certainly, the numbers look stellar.

Rents for class A, top-shelf office space like the Back Bay’s Hancock Tower rocketed up 9.2 percent in the first quarter of 2019 compared to the same period a year ago. Rents in the next tier down, class B, weren’t far behind, rising 7.4 percent.

At the above mentioned $60 a square foot, only New York ($80.85) and San Francisco ($86.22) rents are higher, according to Colliers.

Available office space also fell by 30 basis points, down to 8.9 percent, the firm notes.

Leasing is also on a roll as well.

During the first three months of the year, companies took nearly 700,000 square feet in previously empty office space off the market.

The three largest leases inked during the quarter totaled 1.1 million square feet, with downtown corporate mainstay State Street leading the way with plans to move to a new headquarters at One Congress Street, where it will occupy 510,000 square feet.

Of course, the commercial real estate market is all about jobs and job growth.

No job growth equals no new towers. Conversely, when job growth is robust – as it is in Boston area, driven by sectors ranging from tech and biotech to financial services – it drives demand for new towers and more space.

The Bay State’s jobless rate fell in April to a rock-bottom 2.9 percent, with the state adding more than 37,000 new jobs in the previous year.

Developers are responding. Former Boston City Hall development chief Tom O’Brien’s HYM Investment Group is building State Street’s headquarters, the 43-story One Congress Street, next to Government Center, while and Millennium Partners forging ahead with plans for nearly 700-foot tall office and condo tower in the Financial District.

“There is not nearly enough product within 3 miles of Boston City Hall, where 14 of [the] 15 commercial lease commitments since 2014 over 200,000 square feet in size have taken place,” Carroll said. “So, building … within this footprint is getting leased rapidly.”

Scott Van Voorhis

Watch Out for WeWork

Yet while the immediate future looks bright, there are a couple potential party-killers to keep an eye on.

First, is the current, frenetic pace of growth in Boston’s office market truly sustainable, especially when we are talking about nearly double-digit rent increases? Reports of $100-per-square-foot rents in the Back Bay have “historically … been viewed as an indicator the Boston market is peaking,” Colliers notes.

There is another concern not mentioned in the Colliers report, which points to a potential structural weakness in all that growth driving up rents and driving down office vacancy rates downtown.

That potential trouble spot is none other than office market/tech darling WeWork, which now controls over 1 million square feet in downtown Boston, alone.

New York-based WeWork leases space from office tower and building owners and then rents it out under more flexible payment and space arrangements to smaller companies and startups.

The firm’s business model is based on being able squeeze more money out of tenants than the hefty sums it has paid tower owners for the use of its space. The key to this is packing more people into the same amount of space, which is masked somewhat by the rise of the open layout, less-space-intensive digital office.

But WeWork is now on track to become the largest single leaser of office space in Boston, with the potential to surpass Fidelity Investments, which occupies 1.5 million square feet.

Yet here’s the rub: While WeWork is gearing up for an IPO, it has been struggling to turn a profit. And the type of tenants it focuses – startups, individual professionals, smaller firms – are also the most likely to jettison space or bail altogether should the economy take a turn.

Simply put, the prospect of WeWork replacing Fidelity as the backbone of the Boston office market is not all that reassuring.

That said, while there may be trouble brewing down the road, there are no imminent signs at the moment the WeWork bubble is about to burst.

And for Boston’s commercial real estate market, I have two words of sage advice: Party on.

Scott Van Voorhis is Banker & Tradesman’s columnist; opinions expressed are his own. He may be reached at sbvanvoorhis@hotmail.com.