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Office vacancies in Cambridge continued to rise in the fourth quarter to nearly 13 percent and tenant demand remains muted in the near term.
Tenants are only in the market for 360,000 square feet of office space in Cambridge, a 71 percent decrease from the end of 2019, according to CBRE’s fourth-quarter office research.
Greater Boston’s suburban office market also continues to be affected by many of the same factors in the post-pandemic hybrid work environment. And recent market conditions indicate Cambridge’s status as the East Coast tech and life science capital hasn’t shielded it from the downturn in leasing demand accelerated by higher interest rates and declining venture capital investment.
“[E]ven a city like Cambridge, known as an epicenter for innovation, is not immune to the macro-economic environment of the impact that the COVID pandemic had on the broader work from home movement and the slowdown in technology hiring,” CBRE reported.
The office vacancy rate hit 12.8 percent, up from 12.5 percent in the previous quarter. The year-end availability rate was 23.7 percent, up from 19.7 percent in the third quarter.
One major office tenant, Intersystems, relocated to Boston’s new One Congress office tower, leaving behind 240,000 square feet at One Memorial Drive.
Asking rents have declined 8.1 percent since early 2023 and ended the year at $79.43 per square foot on a gross basis.
In the Greater Boston suburban office market, which spans 105 million square feet, major leasing activity was absent in the fourth quarter. The largest new deal was a 31,000-square-foot lease by SciAps at 6 Riverside Drive in Andover.
The central Route 128 market, considered the core suburban office market which consistently fetches the highest rents, ended 2023 with an 18.2 percent vacancy rate and 23.3 percent availability rate. Asking rents were $42.20 per square foot on a gross basis.
The vacancy rate across all suburban office submarkets hit 17.6 percent, reflecting 2.3 million square feet of negative absorption during 2023.
