Boston companies are continuing to grow.
This quarter, 70.0 percent of lease transactions were tenants looking to grow their footprint. Technology and biotech industries continue to drive demand, and accounted for over 30.0 percent of the large lease transactions. With over half of the leasing activity occurring in the Boston CBD, this market saw a high velocity of transactions from smaller tenants from a variety of sectors looking to expand or enter the market.
Foreign investment continues to look to Boston and found targets in nearly every submarket this quarter. For 2014, Greater Boston reached $9 billion in total sales volume. While pockets of value and opportunity remain in submarkets outside of the CBD and in older office space across the market, local buyers now face higher prices and increased competition from outside the region.
Direct average asking rents for Greater Boston rose nearly 5.0 percent over the quarter and reached a new high at $31.74 per square foot, growing 12.0 percent year-over-year. The vacancy rate dipped by 140 basis points reaching 14.7 percent. While still off peak levels, the vacancy rate is now approaching 2007 levels.
While nearly 2.7 million square feet of new supply is expected to be delivered in 2015, twice the amount of space delivered in 2014, this new construction is over 50.0 percent pre-leased. This limited supply of the speculative space over the next 12-24 months is anticipated to create a squeeze on the market and drive rents at an accelerated pace.
Greater Boston Q4 stats summary