Over the last two years, office rents along Central 128 have been on a swift decline as a result of surging job losses, increases in vacant and sublease space, and sluggish leasing. While “cheap” rents have become the norm, it seems as though rent erosion is beginning to abate.
Prior to the recent rent decline, average asking rents grew from 2006 into late 2008. In the first quarter of 2008, average asking rents stood at a robust $38.02 in Class A and $27.44 in Class B. By year’s end, thanks to a fourth quarter wrought with economic turmoil and confusion, rents had fallen to $33.08 and $27.07 respectively. That’s a long fall in a short period of time.
The tumbling continued through 2009. By the end of 2009, Class A asking rents averaged $29.23, down 24% from the beginning of 2008. Class B rents had fallen 11% to $24.45. Steep? Yes. Surprising? Not at all.
What is surprising, however, is that rents seem to have hit bottom. In the first two quarters of 2010 rents have remained flat. The free fall is likely over, but a recovery is still far off.