The Return of an Owner’s Market?

It might be a sign that the commercial real estate industry’s recovery is beginning.  A recent article in Banker & Tradesman,  entitled High Rise Office Space Expected to Soar, describes a significant improvement in the industry bellwether of tower leasing. With vacancy rates around six percent in the “upper floor” market in Boston high rises, rents are beginning to push upwards.

This is obviously the premium space in Boston, but in the past it has been a good indicator of market recoveries.  There needs to be more business expansion with substantial job creation for this to spread to other Class A space in downtown and the Route 128 suburbs, but it is a start.

Brokers are now advising their clients to lock in their leases at the current rates.  It appears that the indecision that was evident in 2009 and 2010 is being replaced with timely transactions.  Whether these lease renewals are for current space needs or include expansion for future growth is the most important question.

The good news is that Massachusetts is one of the few states showing any job growth.  Let’s hope that this is the start of a more sustained recovery.

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