Construction of office buildings is picking up pace in Greater Boston, with the growth of biotechnology companies helping revive a market that all but disappeared in the depths of the recent economic downturn.
The amount of office space under construction rose to 1.6 million square feet in the area during the last three months of the year, an eightfold increase from the low the market hit at the beginning of 2011, according to the Boston commercial real estate firm Richards Barry Joyce & Partners.
The firm’s figures show that development of new office buildings has become much less speculative, with 100 percent of the space under construction already committed to tenants. That compares with only 6 percent in the third quarter of 2007. Nonetheless, real estate specialists agree the market is on the mend.
“It’s been a slow climb back, but my feeling is we’re right in the middle of a recovery,’’ said John Miller, a senior vice president with Lincoln Property Co., which released its own report on the fourth quarter of 2011 that confirms the market’s steady improvement.
The firm reported that average asking rents at top-rated buildings in Boston jumped to $45.56 during the last three months of the year, up from $43.67 at the end of 2010.
Lincoln also found that East Cambridge and the Back Bay in Boston are performing exceptionally well, with vacancy rates of just 3.8 percent and 4.2 percent, respectively.
However, there remain several chunks of empty space in towers in Boston’s Financial District, as the former occupants take advantage of bargains on more exclusive high-rise offices.
Several companies have also moved into Boston from suburban locations or expanded into new buildings.
For example, Communispace Corp. relocated from Watertown into 85,000 square feet of space in the Atlantic Wharf tower at the edge of the Financial District. LEK Consulting expanded into 61,000 square feet at 75 State St. from a prior location at 28 State St.
Overall, tenants absorbed 861,000 square feet of space in the Greater Boston market in the last three months of the year, according to Richards Barry Joyce, the largest quarterly gain since 2007.
One of the market’s bright spots is the Innovation District on the South Boston Waterfront, which has a number of office buildings under construction. The area has one of the largest privately funded development projects in the nation: the $800 million construction of headquarters for Vertex Pharmaceuticals Inc. at Fan Pier.
Bob Richards, president of Richards Barry Joyce, said the Innovation District has had a “dramatic’’ increase in interest in the last two years. “It’s definitely a trend, and it’s absolutely on tenants’ minds,’’ he said. “People want to know what’s happening there.’’
Other large construction projects underway include new headquarters for Biogen Idec in Kendall Square and a tower for Liberty Mutual Insurance Co. in the Back Bay.
Swiss Pharmaceutical giant Novartis AG is building an office and laboratory complex outside Cambridge’s Central Square.
Still the market remains well below its peak of 2.6 million square feet under construction in the third quarter of 2008. That reflected a flurry of speculative development during the market’s run-up in 2005 and 2006.
Several real estate executives said they don’t expect widespread speculation to return soon because most employers are not growing significantly and plenty of empty office space remains available in Boston and its suburbs.
“I don’t see it taking off in the near term,’’ said Miller, of Lincoln Property Co. “The market needs a little more absorption of [existing office space] and lower vacancy to spur a lot of new development.’’
Casey Ross can be reached at firstname.lastname@example.org.