The office market continues its upward push with the best year since 2007 and no signs of letting up. Increased rents combined with fewer tenant improvement dollars, increased construction costs and limited rent abatement make the total occupancy cost even higher.
From the Boston Business Journal:
At 13 percent vacancy, Greater Boston notched the eighth-lowest office vacancy rate in the third quarter. That rate has stayed relatively flat, dropping just 0.2 percent year-over-year, the Reis report said…The increased demand for office space is driven by continued gains in the labor market, Reis said.
“Over the last seven years, not only has the number of total jobs created per month gradually increased, but the number of higher-wage, office-using jobs has also increased,” Severino said. “The labor market clearly shifted into a higher gear in 2014 and that is beginning to have a more consistent and material impact on the office market. Vacancy compression is poised on the precipice of accelerating in the next year or so.”