The Greater Boston office market experienced more than 1 million square feet of negative absorption in 2011 – but finding bright spots Boston, Cambridge and Route 128 North, according to a recent report.

“All of these markets measured positive gains over the second half of the year, signaling that a recovery is slowly underway,” a Q4 office preview report from Lincoln Property Co. read.

Due to negative growth measured in the Class A Boston market and most suburban submarkets, the overall market’s vacancy rate increased to 15.4 percent by the conclusion of 2011 from 14.8 percent in 2010. More than 1.1 million square feet of negative absorption was the result of the increase in vacancy, with a majority of that measured along Interstate 495. Fidelity’s exit from its Marlborough campus, along with Dassault Systemes’ leases in Lowell and Concord expiring, contributed to the majority of negative growth calculated.

In submarkets that have demonstrated consistent growth throughout 2011, construction activity has begun to pop up. For instance, in East Cambridge where the vacancy rate was calculated at 3.8 percent in Q4 2011, tenant demand has supported additional construction activity in both Cambridge and Boston. Vertex’s new headquarters at Fan Pier kicked off construction this summer and Biogen’s return to Cambridge produced approximately 500,000 square feet of scheduled new construction in East Cambridge. Overall, these Cambridge tenants, plus others, are in the process of supporting construction and permits for more than 2.5 million square feet of new lab and office space in Cambridge and Boston.

But, the good news has not yet spread to the suburbs. In 2012, peripheral suburban markets are likely to adjust slowly as the markets along Route 128 absorb the tech sector’s growth.

Report: Local Office Market Recovery ‘Slowly Underway’

by Banker & Tradesman time to read: 1 min
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