Torto Wheaton Research, a Boston division of CB Richard Ellis Services Inc., the nation's biggest property broker, said vacancy rates in major metropolitan areas rose from 8.3 percent at the end of the year to 9.5 percent by March 31. That's the highest point the rate has reached since late 1999, and its biggest one-quarter jump since Torto Wheaton began tracking vacancies 15 years ago. Boston office buildings reported lower overall levels of vacancy than other cities, but showed a larger jump in percentage terms. Vacancies increased from 3.9 percent to 5.9 percent in the metropolitan area, the same level hit in the fourth quarter of 1999.
Core demand is definitely down, which is a function of a number of different things.
A slowing economy, mounting job losses, and higher rents are at the top of the list, Costello said. A government report also released yesterday showed that American companies shed more jobs last month than they had at any time in the last decade. It's not just limited to the high-tech sector. Torto said the vacancy rate may rise as high as 11 percent nationwide by the end of the year. Rents, after increasing more than 10 percent each of the past three years, will be unchanged this year, he said.