One Federal St. Boston. Photo courtesy of Tishman Speyer
Asking rents for office space in Greater Boston declined in the third quarter as landlords competed to attract leases in a tenant-friendly market.
Total vacancies total 22.3 percent of the region’s 186 million-square-foot office market, according to JLL’s third-quarter office report.
Compared with the previous quarter, asking rents declined from $52.49 to $51.88 per square foot for class A space, and from $46.34 to $45.85 for class B space.
In Boston, which has a 17.3 percent direct vacancy rate, pending office-to-residential conversions and leases by public agencies removed some underutilized space from the market, including Suffolk University’s acquisition of 101 Tremont St. for student housing.
Six state agencies leased 106,000 square feet at 1 Federal St. in Boston as their existing leases expire elsewhere in downtown, South End and Back Bay. More than 800,000 square feet of state office space has expiring leases in 2024 and 2025.
In Quincy, the MBTA acquired the 150,000-square-foot 200 Newport Ave. office building for future space needs.
Major private sector leases included Bain Capital’s expansion at 200 Clarendon St. in Back Bay and Vertex Pharmaceuticals’ 1.1 million-square-foot renewal at the Fan Pier.
Boston led all U.S. metros in return-to-office traffic over the past 12 months, according to data released by Placer.AI in August, suggesting an uptick in demand for office space that’s been disrupted by the shift to hybrid and remote work.
But the tech sector’s retrenchment is acting as a drag on the 8.6-million-square-foot East Cambridge submarket, where leasing declined 66 percent year-over-year and more than 75 percent from 2019 levels. The submarket’s direct vacancy rate was 10.2 percent at the end of the quarter, with average class A asking rents of $89.25 per square foot.
Suburban office development has taken a pause, with all 2.2 million square feet of local office space under construction located in Boston and Cambridge. Suburban direct vacancy rates range from 16.3 percent in the south market to 28.5 percent in the Route 495-Massachusetts Turnpike market.
