With the continued focus on the Seaport and the prominent tenants taking space there, it may not surprise you that leases in the Seaport in 2016 were, on average, the longest and the largest in downtown Boston. But what may surprise you is that despite the headlining deals, 90% of new leases were under 30,000 SF.
In a reversal of a trend from 2015 (when class B was all the rage) 2016 saw tenants move toward Class A space, mostly on the still-affordable low-rise floors. The over half of which were in class A buildings. This was partially driven by tech tenants, who remained enamored of low-rise space – 76% of new leases signed by tech companies stuck to the lower floors. But financial services firms won’t let the Financial District go without a fight. With 70% of financial services deals landing in the Financial District, it remains their preferred location.
2016 also saw the gap between high and mid-rise rents tighten, while the gap between mid and low-rise rents expanded. In the Back Bay mid-rise space commanded a 46% premium over low-rise. In the Financial District the rent disparity between mid and low-rise space grew by 7 percentage points to 20%. On the subject of rents, Boston remained a landlords’ market everywhere except the Back Bay, where achieved rents were 16% lower than asking rents.