Our JLL Boston Skyline Review is an analysis of the premium tower market comprised of 44 Class A buildings taller than 15 stories. With this building analysis, we’ve factored in that Greater Boston continues to enjoy favorable economic conditions driven by strong employment growth. Following significant growth of 39,900 jobs in 2013, Metro Boston has added 19,800 jobs year-to-date and now stands at an all-time high of 2.6 million jobs, 20,000 jobs above the dot-com peak. This growth has translated into more demand for office, particularly in the Boston CBD where the urbanization trend continues to attract companies and employees seeking to benefit from the City’s growing amenity base and public transportation system.
The JLL Skyline confirms that office fundamentals are tightening in the Boston CBD. The overall vacancy stands at 10.6 percent, dropping 50 basis points compared to six months ago, and market pricing stands at $55.47 per square foot, up 6.3 percent year-over-year. While the Back Bay and Seaport District saw upticks in vacancy, Downtown (Financial District) vacancy decreased 120 basis points over the past six months due to several notable leases. At 75 State Street, CDM Smith signed a 110,000-square-foot lease in the low-rise floors and will relocate from Cambridge. At One International Place, law firm Morgan Lewis & Bockius leased 45,000 square feet on floors 36 through 38 and will relocate from 225 Franklin Street.
Right-sizing and cost-cutting measures continue to affect leasing momentum. While many office users prefer to maintain a presence in the CBD, some have opted for lower rent in low-rise spaces of Class A towers with access to the same amenities, minus the view. In fact, the low-rise vacancy rate stands at 8.9 percent, down 280 basis points over the past six months, and 370 basis points below the high-rise vacancy rate of 12.5 percent.
With new office projects, notably 101 Seaport Boulevard and 100 Northern Avenue, scheduled to deliver at the end of 2016, the future remains to be seen whether the future available spaces can be back-filled. In the near term, there is room for the Skyline fundamentals to further tighten, fueled by positive economic outlooks and strong demand.
The Skyline Review is an in-depth and exclusive look at top-tier assets and their impact on the overall Boston and Cambridge markets. To receive your own copy of JLL’s Winter Boston Skyline Review, please enter your information here.