Consumer-facing tech companies in Boston accounted for a major increase in sublease listings during the second quarter.

Economic shocks from the COVID-19 pandemic left their mark on the Boston office market, which registered record levels of negative absorption in the second quarter.

The 1.5 million square feet of negative absorption was the largest ever tracked in a single quarter dating back to the late 1980s, according to Colliers International data. The big driver was a 900,000-square-foot increase in sublease availabilities, as companies sought to cut costs and offered excess space as employees transitioned to remote working arrangements.

“With uncertainty in much of the marketplace about construction timelines and current and future space needs, many tenants are being deliberate and methodical in decision-making,” the report states.

The vacancy rate rose 2 percent to 10.6 percent, but landlords have yet to respond with cuts in asking rents, said Aaron Jodka, Colliers’ managing director of research and client services. In both Boston and the suburbs, most landlords have increased concessions but held firm on base rents.

The sublease surge was driven by consumer-facing tech companies, which accounted for 37 percent of the new available space, according to a separate report issued today by Newmark Knight Frank.

Renewals and extensions accounted for over half of all leases signed in 2020, reflecting companies’ cautious approach to real estate commitments, according to the report by Research Director Liz Berthelette and Senior Research Analyst Michael Malinconico.

Market conditions in Cambridge and the suburbs were healthier as the life science industry continued to generate demand for more lab space. The Cambridge office market had 41,000 square feet of positive absorption, but concerns over the economy have prompted many companies to seek shorter lease terms, Colliers reported.

Life science companies represented 75 percent of the positive absorption in the suburbs, where the vacancy rate crept down 0.1 percent to 15.9 percent in the second quarter.

Subleasing Drives Historic Downturn in Boston Office Market

by Steve Adams time to read: 1 min
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