Our fourth quarter 2012 data for the Greater Boston markets reveals that Boston ended the year on a good note. The Greater Boston market registered 6.6 percent rent growth year-over-year, and a positive 1.4 million square feet in direct net absorption.
At the heart of the strong absorption is the robust recovery exhibited in the Financial District. Jones Lang LaSalle’s new Expanded Boston Skyline Review indicates that the Financial District is benefitting from spillover demand from the Back Bay and Seaport Districts. As market pricing in the high rise portions of premier towers continues to rise, the low-rise subset is at the cusp of this dynamic.
The Financial District registered a vacancy rate of 11.9% at year end – a level unseen since early 2010 and an improvement of over four percentage points over the year. What had previously plagued the Financial District was its large blocks of available space in the low rise segment of the buildings but the spillover demand from the Back Bay and Seaport District has helped fill the void. Leases by Ebay, Partners Healthcare, Iron Mountain, Homesite, to name a few, have all done their part in helping to shape the Financial District recovery story.
The Seaport District recorded another strong year with direct asking rents reaching $37.87, up $8.00 in a single year and eclipsing the Financial District Class B rents for the first time. The Back Bay closed the year with a vacancy rate at an extremely tight 6.1 percent. Asking rents grew a staggering 19.2 percent over the year.