495 West office vacancy rate exceeds 30%
Photo | Grant Welker
Drugmaker Sanofi has left a major Westborough office building at One Research Drive, contributing to the rising office vacancy rate in MetroWest.
The office vacancy rate for a large swath of MetroWest, running from Harvard down to Milford and Holliston, has ticked above 30% as the Greater Boston market faces a potential rent correction, according to the latest Boston office market report from Newmark Knight Frank.
“At the start of the pandemic, the suburban markets saw an uptick in urban users exploring options outside of the city. However, this trend remains more speculative than anything as few tenants – if any – are actually migrating out of Boston or executing so-called 'hub-and-spoke' operations,” the narrative of the report states.
According to the submarket breakdown of the report, 206,295-square-feet of commercial space has come on the market in the West 495 region through the first three quarters of 2020. That has brought the available office inventory for West 495 to 9,551,587-square-feet, for a vacancy rate of 30.7 percent.
The report defines West 495 as the communities of Harvard, Bolton, Stow, Maynard, Berlin, Hudson, Marlborough, Northborough, Southborough, Westborough, Ashland, Hopkinton, Holliston and Milford.
The Framingham/Natick region, according to the report, is fairing better with a 17.9% vacancy rate comprising 3,989,464-square-feet of office space. That region - categorized as Sudbury, Wayland, Framingham, Natick, Sherborn and Dover - has seen 125,054-square-feet come back on the market in the first three quarters of the year.
Even where institutional landlords have been able to hold tenants, re-trades have been averaging 10 to 15% below asking rent, according to the report.
"Increased concessions in the form of more free rent and higher TI allowances are commonplace as well,” the report states. “Ultimately, price discovery will take time to work through and the possibility of a steeper rent correction is on the horizon.”
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