Our fourth quarter 2013 data and analysis for Greater Boston reveals that the region ended the year on a good note. The market registered 5.6 percent rent growth year-over-year, and a positive 602,000 square feet in direct net absorption.
Through November, the Greater Boston NECTA added 52,000 jobs, a level unseen since the early 2000s. The market demonstrated resilience. More than half of these new jobs were added since August, showing a decided shift in momentum that may be taking shape. While employment data can be revised dramatically, the tightening in fundamentals and the leasing activity we are seeing in the market both support this trend in employment growth.
Greater Boston closed out the year with rents up 5.6% over 2012 levels. The vacancy rate has continued to decline coming in at 13.8%, 300 basis points above the metro long-run average.
At the heart of Boston’s story is two trends. On one side, the large corporates that are mature and growing at a slower pace continue to explore build-to-suit possibilities. There are a number of BTS projects underway in the city and suburbs.
On the other side, fast growing small-to-mid size firms are filling the non-traditional office space in secondary markets, creating pockets of growth in Boston and surrounding areas. An increase in amenities is coming in to cater to the growing workforce.
In the CBD, Class B buildings exhibited 6.2% rent growth in the year, ending at an average of $39.72 p.s.f. The vacancy rate of the Class B segment reached a level unseen since 2001.
In the suburbs, while the Northwest submarket which includes Burlington, continued to see significant growth in leasing and sales, holistically all of the suburbs are improving and gaining traction.
Development is at the core of Greater Boston’s story right now. This quarter notable news includes the full completion of Biogen’s nearly 500,000-square-foot BTS projects in Cambridge. In Boston, the BRA approved the Government Center Garage redevelopment. And in the suburbs, Partners Healthcare has committed to a BTS for up to 1.1 million s.f. at Assembly Square in Somerville.
It is a very exciting time to be in Boston as a resident, tenant or investor. The metro area is undergoing a transformation. Being an innovation economy is positioning Boston well for the long run. Being an innovation economy that evolves with the changing times and demographics can only further support our long term outlook. The metro area is doing just that.