Friday, August 3, 2012, 11:25am
The Route 2 West and Interstate 495 South markets are expected to experience a slight decrease in rents from now through January, according to a report from Lincoln Property Co.
While Greater Boston’s average asking rate for office space has increased to $26.93 per square foot, marking another period of year-over-year growth, those two markets are being held back according to the report.
Sublease space along Route 2 West remained above 8 percent at the close of Q2, dragging down the submarket’s average asking rate to $14.97 per square-foot, a 6.1 percent year-over-year decline. Maynard suffered from 38 percent total availability. This “severe” over-supply sent average asking rates plummeting 26.3 percent to $10.11 per square-foot, according to Lincoln’s report.
Two bright spots were Acton and Littleton, which both measured average asking rate increases. However, their strong performances were not enough to influence the overall submarket. With 185,000 square feet of negative net absorption over the previous year and total availability above 30 percent, Lincoln does not expect any short term improvements in the Route 2 West submarket.
In the I-495 South market, the average asking rate increased year-over-year by 1.1 percent, mainly due to gains measured in Foxboro, which constitutes nearly 30 percent of the entire market. Despite 25.9 percent vacancy, Foxboro’s average asking rate increased by 4.2 percent, partially the result of newer product and Class A office space supply. Yet as a result of strained market conditions, Raynham and Franklin combined to lose 35,000 square feet, decreasing their average asking rates by 6.5 and 0.5 percent, respectively. Overall, average rents are anticipated to decline slightly since leasing velocity for office space along I-495 South remains limited.
Despite the outlying bad-apple sub-markets, Lincoln is predicting moderate to slight increases in rent in the Boston, Cambridge, 128 north and west and Interstate 495 West markets in the next six months.
Looking back, the 3.4 percent boost in rents started earlier in the year in the core Boston and Cambridge markets and slowly worked its way out into the suburban markets, which posted mixed performances, according to Lincoln’s report.
By the midway point of 2012, Cambridge average asking rents had “exploded” by 14.8 percent year-over-year, edging Boston up as the most expensive market, the report states.