Route 495 Office Vacancies in 30% Range

BOSTON-Vacancy in the Route 495 West suburban office submarket hit 31.1% in the first quarter, according to a report by Grubb & Ellis, and the trend that included 216,523 sf of negative absorption is likely to continue. The firm predicts tenants will continue to exit the submarket that includes Marlborough and Westborough, perhaps to areas such as Waltham in the Masspike/Route 128 submarket closer to the city.

When sublease space is added in, 35.1% of the Route 495 West submarket’s 7.9-million-sf is vacant, according to Grubb & Ellis research. Meanwhile, another 72,000 sf is under construction.

In the 6.6-million-sf Route 495 North submarket, vacancy is approaching the 30% threshold at 29.3%, according to Grubb & Ellis.

“In submarkets with extremely high vacancies, such as the North and West 495, landlords will continue to feel pressure to fill space at lease rates just sufficient to meet operating expenses,” according to the firm’s report.

The overall vacancy rate in the 149-million-sf suburban market is 21.1%, and absorption was actually positive in the first quarter at 251,129 sf.

While the Route 495 West submarket is the weakest in the suburbs, Route 495 South is one of the healthiest. Its 13.3% vacancy is topped only by the Inner South’s 11.1% rate, according to Grubb & Ellis. However, the Route 495 South is the region’s smallest submarket at just 1.7 million sf.

Only two other suburban submarkets started the second quarter with vacancy rates under 20%. The 8.1-million-sf Route 128 South submarket carried a 17.8% vacancy rate while the Inner North submarket checked in at 19.7%.

Although Grubb & Ellis brokers played a role in propping up occupancy in Masspike/Route 128 with KeySpan’s 115,000-sf lease in Waltham, vacancy in the 21.6-million-sf submarket began the second quarter at 20.6%.