Although overall third-quarter leasing activity was slow, Hobbs Brook Management reached a deal with marketing and billing firm Epsilon involving more than 100,000 square feet of space at 601 Edgewater Place in Wakefield, a recently completed speculative office development.

Anemic? Feeble? Weak-kneed? When it comes to Greater Boston’s office market, any of the above could apply these days.

As the sector turns the corner toward the final stretch of a difficult 2002, third-quarter figures released last week by two Hub real estate firms indicate a continued erosion of office fundamentals, with availability rates in some areas surging above 30 percent and rents rolling unendingly downward, even in Boston and once-mighty Cambridge. Spaulding & Slye Colliers estimates the 144 million-square-foot market suffered 369,000 square feet of negative absorption in the past three months, dropping activity for the year in the red by a once-inconceivable 2.7 million square feet.

Still, even as some experts predicted that prospects appear bleak for a meaningful recovery in 2003, there are a few signs that the worst of the problem may finally be over, with a number of last-minute leases helping to bolster activity in the latest quarter, including a few sizable agreements. Hobbs Brook Management has scored a trio of six-figure leases since mid-year, for example, including an encouraging pact signed last week with Internet software firm Novell Inc. that will have the networking operation relocate to 404 Wyman St. in Waltham.

Although both the suburbs and downtown Boston had a sluggish summer, some areas have begun to stabilize, according to Richards Barry Joyce & Partners. “Cambridge was the main bright spot,” said Katie Kelly, RBJ&P’s director of research. After starting the year at 22 percent, RBJ&P reports the vacancy rate in East Cambridge has fallen to 19.6 percent, while the city’s overall vacancy rate is down from 16.6 percent to 14.4 percent.

“We don’t think we’re anywhere near a correction, but there is a fair amount of activity in Cambridge,” said RBJ&P President Robert B. Richards. “It’s the first example where there is at least some traction in the market.”

Spaulding & Slye reported a similar trend. Although its 11.8 percent vacancy rate and 22.2 percent availability level were different statistically from RBJ&P’s estimates, reflecting vagaries in each firm’s treatment of the leasing market, Spaulding & Slye also saw positive activity in Cambridge during the third quarter. Most of the good news was on the life sciences end, headlined by the hefty 250,000 square feet Novartis AG took at Technology Square. That brought the third-quarter velocity to a positive 213,000 square feet, improving the year overall in Cambridge to 436,000 square feet.

Spaulding & Slye Director of Research Ben Breslau said the office portion alone likely would have finished in the red in Cambridge for the third quarter, but he agreed there are indications the city is finally on the mend after nearly two years of decline. “In general, things are still negative, but less negative than before,” said Breslau.

Among the larger deals in the quarter occurred when Cabot, Cabot & Forbes signed Genzyme Corp. to a lease at 55 Cambridge Parkway, while Richards noted that RBJ&P has aided Cambridge-based companies in the resolution of deals involving 850,000 square feet already this year. In some instances, those were lease buyouts; others were subleases and lease assignments. “Companies in Cambridge are very active in their rightsizing … and that is a healthy thing,” Richards said.

Regardless of the recent improvements, rents continue to be a struggle in Cambridge. Landlords have remained firm on asking rates, Richards explained, but ultimately will move aggressively if it means cementing a deal with a solid tenant. The excess supply and uncertain economy have brought rents down from a steady stream of $40 per-square-foot transactions in the summer of 2000 down into the $30s and even below that level.

‘Flight to Quality’

Conditions are considerably more disconcerting the farther one travels from the core markets, however, with RBJ&P placing the suburban vacancy rate at 20.05 percent overall and availability rates as high as 33.5 percent in the Interstate 495 corridor. That strip promises to worsen over the near term, said RBJ&P principal Jon Varholak, who predicted there will be additional supply placed on the block by struggling high-tech firms.

“Companies are still subleasing space, but are holding back on what they really could sublease,” said Varholak, explaining that such “gray space” would extend the current malaise indefinitely along I-495 North and West.

Varholak said there are more encouraging signs closer in to Boston, with Route 128 West seeing deals such as the Novell pact, as well as a 61,000-square-foot sublease by Partners Healthcare in Wellesley and the 68,000-square-foot lease by Cognos at 15 Wayside Road in Burlington. On a smaller, but still significant, level, Varholak said there have been a number of deals below 20,000 square feet recently completed at properties from Lexington to Needham, agreements that reflect a willingness among landlords to negotiate concessions such as free rent in order to get a deal done. Often, he said, the tenant and landlord agree to extend a short-term sublease beyond its expiration date.

Perhaps the greatest performance in the third quarter would be that of Hobbs Brook Management, the owner of both 404 Wyman St. and 601 Edgewater Place in Wakefield. The company not only re-signed IBM Corp. to remain at 404 Wyman St., located in the Hobbs Brook Office Park, it also completed the 105,000-square-foot Novell lease and another six-figure agreement with Epsilon at the new Wakefield structure.

“There is a real flight to quality,” said Charles E. “Chip” Batchelder, the R.M. Bradley senior vice president who represented Hobbs Brook at both the Waltham and Wakefield properties. Batchelder praised Hobbs Brook Management for being responsive to tenant needs and offering a long-term ownership outlook that added comfort to the deals. Brooks Murphy of the Staubach Co. represented Novell in the negotiations. Murphy referred calls to his client, but efforts to contact Novell officials by press deadline were unsuccessful.

Hobbs Brook Management Vice President Donald Oldmixon acknowledged there were some tense moments in recent months, especially as the speculative 601 Edgewater Place building neared completion. “It was a little scary, but we got it done,” he said, adding there has been encouraging velocity of prospective tenants in recent weeks, so much so that Hobbs Brook has begun construction of a companion building alongside 610 Edgewater Place.

The IBM lease was also a coup, Oldmixon said, although the firm is reducing its space in the complex, where it has occupied quarters since the 1960s. IBM explored other options in a competitive Waltham market before opting to stay put.

“We feel good about that,” Oldmixon said, adding the Novell deal offers additional stability. The high-tech company will consolidate its Massachusetts operations from Cambridge, Billerica and Wellesley, taking a portion of the space IBM is giving back.