Boston Office Market Shows Growth Momentum, But Full Recovery Is a Long Way Off
As the commercial real estate market responds to a post-pandemic economic climate, the latest findings from JLL’s Office Outlook for Greater Boston indicate some momentum, but full recovery is a…
Boston, Massachusetts, USA skyline over Boston Common.
As the commercial real estate market responds to a post-pandemic economic climate, the latest findings from JLL's Office Outlook for Greater Boston indicate some momentum, but full recovery is a long way off.
Boston's office market is showing signs of improvement as the first quarter of 2025 concludes. It has been marked by declining vacancy rates for three consecutive quarters.
The Boston area's total office vacancy rate fell to 22.5%, with Class A office space in the city experiencing an even marked decrease, down to 19.8%. Leasing activity has also seen strong growth, with a 39.8% increase in leasing velocity compared to this period last year, indicating a robust demand for office space.
The Boston Real Estate Times summarized the following highlights from the JLL Q1 report:
- A significant development in the tech sector is Klaviyo's renewal and expansion of 256,000 square feet at 125 Summer St. It's one of the largest downtown Boston leases since the COVID-19 pandemic.
- The Seaport submarket has performed particularly well. Nine of the 14 Class A buildings in the area are now fully leased, resulting in a direct vacancy rate of less than 5%.
- Demand in the suburbs has also helped support the office market's recovery. Commonwealth Financial Network leased 151,000 square feet in Waltham, and Global Partners secured 100,000 square feet in Newton. Advisor360 also signed a deal in Needham.
- Upcoming office developments include the South Station Tower and 10 World Trade, both slated for later in 2025. If these projects don't generate sufficient pre-leasing activity in the months to come, they could increase the office vacancy rate.
According to the Boston Real Estate Times, despite these promising developments, the office market still faces challenges, including the slow return of Boston's workforce to the office and the continuing impact of remote work on overall demand for office space. The future of the Boston office market will depend on balancing new supply with demand, especially given new deals anticipated in the second quarter.
