The Story Behind the Sublease: Route 128 Corridor
Much like the Greater Boston market as a whole, the Route 128 corridor has seen a sharp increase in sublease availabilities in the past year. At first glance, this seems good for space occupiers: tenants have more options to choose from and more time to analyze potential spaces for quality and fit. However, tenants in the market should do their research and proceed with caution, as there are some important dynamics at play for those pursuing space in the coming months.
How We Got Here
In anticipation of the current economic downturn, many organizations reassessed their real estate strategies and hybrid work patterns and adopted a more conservative approach. As a result, some companies opted to shed some or all of their space, leading to the influx in availabilities currently on the sublease market. At the close of 2022, there was approximately 2.41M SF of sublease space available along the Central Route 128 corridor, nearly tripling the April 2020 figure. Of the space available, 74% is office product and 26% is life sciences/flex space. This inventory has ballooned even further midway through the first quarter of 2023, with the sublease inventory now approaching 2.9M SF.
While this dynamic certainly benefits occupiers in search of space, digging deeper into the numbers illuminates a more nuanced state of the market. While the available square footage has increased, the total number of subleases has fallen from its 2020 peak, meaning that the average sublease hitting the market is getting larger in size, now averaging 28,000 SF as opposed to the 16,800 SF average in Q4 2020. Additionally, of the inventory available on the sublease market, less than 40% is considered true Class A product. This suggests that while larger commodity offerings are plentiful, smaller users will likely still face tight competition for their target footprint in quality buildings.
Despite these competing dynamics, there is significant opportunity for occupiers in decision-ready positions to leverage competing sublease product against direct availabilities to maximize potential concessions. To maximize the benefits, users should be ready to act quickly and decisively to secure the highly desirable spaces in the Route 128 market. Be sure to complete right-sizing exercises and engage with a market advisor early in the process to maximize your timeline and options. To learn more about the Route 128 market and expert predictions for the year ahead, download Cresa’s recently published Market Insight Report.