This story was published originally on boston.com.
Cambridge gained occupied office space this summer, while Boston lost ground, according to a new report. And as a Newmark researcher noted, artificial intelligence companies may be the driver.
Cambridge’s occupied office space increased by about 98,000 square feet from July through September, according to the commercial real estate firm’s latest report. Boston’s central business district moved in the opposite direction, losing about 397,000 square feet of occupied space.
Still, a quarter of Cambridge’s office space remained vacant, compared to 23.2 percent in Boston’s central business district, which runs from the Seaport through downtown to the Back Bay.
Elizabeth Berthelette, Newmark’s head of Northeast research and national life science research, said Cambridge’s talent pool and proximity to other technology companies make it an appealing destination.
“I think Cambridge makes a lot of sense,” she said. “It’s the epicenter of innovation in our market.”
Newmark’s report highlighted Anthropic’s Cambridge lease as a sign of the region’s growing AI presence. Another AI company, Blitzy, announced a 52,000-square-foot lease at One Kendall Square in September. Blitzy, which was founded in Cambridge in 2023, expects to occupy its new space next spring.
The growth this quarter was driven mostly by AI-related companies leasing and by the recapture of some previously occupied space, Berthelette said.
“I think it’s the talent, it’s the clustering,” she said. “A lot of these innovative companies want to be near other innovative companies.”
Robotics companies are taking space in Cambridge, too. BioMed Realty recently announced that Walden Robotics has leased 50,000 square feet at 20 Sidney St. in University Park.
AI-related demand is growing in Boston, too. Hi Marley, which provides a communications platform for the insurance industry, recently moved its headquarters to Atlantic Wharf.
Across Greater Boston, however, the office market remains under pressure. Vacancy reached 24 percent in the third quarter, and the region lost roughly 1.26 million square feet of occupied space during the first nine months of the year.
Tenants are continuing to favor higher-quality buildings, allowing some landlords to seek higher rents even as asking rents face broader downward pressure, Newmark said.
No new office space was under construction across the market during the quarter. Meanwhile, conversions to other uses are removing older office space from the market.
Still, high interest rates and inflation pose challenges, Berthelette said. Many young companies rely on venture capital funding and are sensitive to higher interest rates, which could complicate their growth, she said.
Regardless, Berthelette said, “We are bullish on the sector.”