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Disruption 2020 - Boston August Sublease Update

Author: Aaron Jodka

By Aaron Jodka | September 2020

Sublease space is continuing to flood the Boston market, since this is nothing like a normal slow summer for real estate. With more tenants pushing back their return-to-office date, the full effect of sublease space entering the market won’t be felt for several quarters. Many tenants do not yet have full plans for future occupancy needs. We will release our quarterly Viewpoint report as the quarter ends, but at this point, we expect a further increase in sublease space in September.

Disruption2020-SubleaseAugust-Ribbon

Disruption2020-SubleaseAugust-Graph-Image
  • 560,000 SF of additional sublease space has come on the market since June, after a total 900,000 SF was added in Q2.
  • This five month increase in sublease space (through August) now rivals the space released in the worst two quarters of the tech bust and in the aftermath of the September 11 World Trade Center attacks.

  • The majority of these deals (152) have been less than 15,000 SF.

  • Several subleases have been taken in the third quarter, proving that space can move.

  • We have seen some Class B landlords lower asking rents, as this sublease space directly competes with their product.

  • Class A rents have generally held up, but we are closely monitoring those conditions.

  • The bulk of this sublease space has come from tech firms, but other industries such as financial services, biotech/pharma, legal, and business services have contributed as well.

  • The CDC has reportedly notified states to prepare for a vaccine by late October/early November. If this occurs, a return to the office in early 2021 for a majority of employees could be in the offing.

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