Real Estate

Overview

Commercial leasing activity across the First District of the Federal reserve was flat to down in recent weeks, in line with typical seasonal patterns. In Hartford, leasing activity saw a modest seasonal slow-down in December and business sentiment held steady. Activity slowed modestly in Providence as well, also in line with year-end expectations, but deals in the works as of the previous report moved forward as expected and pending deals are set to boost absorption of Class A office space in the first quarter of 2012.

Greater Portland also registered a modest seasonal leasing slowdown in December, but saw a decline in the office vacancy rate on a year-over-year basis, to 10.8 percent from 11.2 percent. Boston’s leasing market held roughly steady, with modest positive absorption in suburban corridors as well as in the sought-after neighborhoods of Back Bay and East Cambridge. Rents remain flat for downtown office space on lower floors of buildings but are rising for upper-floor space in prime high-rise structures. Despite positive absorption in 2011, one contact says Boston’s downtown office vacancy rate remains undesirably high at about 16 percent.