CBRE research shows downtown office subletting is declining

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Source: CBRE Research, Q3 2021

BOSTON. A recent study by CBRE shows that the number of subleases in downtown Boston is declining in 2021. In mid-2020, in the midst of Covid-19 restrictions in Massachusetts, downtown Boston office space flooded the downtown Boston office market. Before the pandemic, the downtown office space market averaged 1.2 million square feet of sublease space in 2018 and 2019. By the end of 2020, sublease space had tripled, peaking at 3.6 million square feet, with over 50% concentrated in the Central Business District. Since the beginning of 2021, the sublease area began to recover, and at the end of July it amounted to 3.2 million square meters. Feet.

Figure 1: Available in sublease sq. Ft. By Quarter (Source: CBRE Research, Q3 2021)

The decrease in sublease area is due to several factors, including the expiration of the sublease and the transition to direct sublease space and tenants who decided to withdraw their subleases from the market with plans to reoccupy them when they return to the office. During the first seven months of this year, more than 500,000 sq. M. Ft. Sublease was withdrawn due to the signing of leases, and at least another 200,000 sq. M. Ft were recalled by tenants for re-occupancy.

As the volumes of lease and return of space have accelerated since the beginning of the year, the inflow of space for sublease to the submarket has slowed down. The average monthly volume of new space in 2021 is 57% lower than the monthly average in the second half of 2020.

Tenants return to the downtown market with more than 4.1 million sq. Ft. Of active demand and an additional 478,000 sq. M. Ft. In anticipation of space required by the end of 2024. The increase in the number of tours and commitments is the new norm for subletting throughout the city. Tenants in the market are looking for less expensive and high quality sublease in the market as direct-requested rents have not seen a sharp decline since the pandemic.

As companies continue to plan to return to the office after Labor Day and the possible delay due to the Delta option, we are closely monitoring any impact on the sublease market and the overall recovery of the Boston market.

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