NORTHEAST SNAPSHOT, OCTOBER 2004
Springfield Office Market
Springfield, Massachusetts, is currently experiencing limited
activity in the office market. Presently, there is minimal
development of new office buildings throughout the area. The
problem can be traced to a greater-than-average level of available
According to Doug Macmillan, president of Macmillan and Son,
a Springfield-area brokerage firm, continuing availability
of office product has destabilized the Springfield marketplace
and caused developers to limit new construction in the area.
The majority of interest in office space has been from local
and regional users seeking to establish or relocate their
businesses within the city or nearby suburbs and Macmillan
sees no change in that trend in the near future.
The substantial availability of sublet space is negatively
affecting the office market, leading many tenants to consider
sublet alternatives. The vacancy rate for Class A office product
is approximately 12 percent and the rate for Class B space
is around 18 percent.
Springfields office market continues to experience
minimal absorption of existing office product, notes
Macmillan. Additionally, the market continues to experience
a measurable level of sublet Class A office space, which has
begun to destabilize the marketplace.
Prospective tenants are attracted by the affordability offered
through sublet space, where Class A rental rates stand between
$13 and $14, as opposed to the $16 to $18 Class A market offering
With scarce demand for new space, developers that are active
in the area are targeting specific occupants with specific
needs. According to Macmillan, New development is principally
build-to-suit construction for credit-rated tenants with specific
locational or physical needs not available in the marketplace.
Tenants that do not have special needs are finding an abundance
of available sublet space that has become more affordable
and more attractive. This has enabled many traditional Class
B tenants to trade up to Class A space.
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