Source: Boston.com
By Beth Treffeisen
Office vacancies in Greater Boston finally eased in the second half of 2025, but the market’s recovery remains an uphill climb.
A new report from Colliers shows the region’s office vacancy rate sitting at 23.9% — roughly 10 percentage points above Boston’s historical average and 16 points higher than its lowest level before the pandemic.
“For the previous couple of years, we were essentially bleeding demand on a quarterly basis,” said Jeff Myers, a research director at Colliers.
But, over the past six months, that has stopped, he said, and there is an increasing amount of occupied space in the Boston market, adding, “I think things are reversing.”
A separate report by Savills also showed an availability rate, including vacant spaces and occupied spaces available for sublease, of 22.2% in the last few months of 2025, down slightly from 24.4% a year ago.
A Cushman & Wakefield report found that overall vacancy in the Boston office space stabilized in the last few months of the year. Still, it remained high at 18.2%.
“There are glimmers here and there,” Riley McMullan, senior research manager at Cushman & Wakefield, said.
So far in 2025, new leasing activity is up more than 72% compared to 2024, McMullan said.
“It’s too early to say we’ve turned a corner, but it obviously is trending in the right direction,” she said.
Cambridge falls behind
Cambridge, once one of the region’s strongest office markets for life sciences and tech, now faces the steepest vacancy spike. Before COVID, vacancies hovered around 5%. Today, they’ve jumped to 25% — “one of the widest swings we’ve seen in the entire market this cycle,” said Myers.
With both the life sciences and tech sectors slowing, Cambridge has lost the two engines that typically drive its growth. At the same time, new buildings planned during the boom years are arriving on the market without tenants.
About a third of the life sciences space tracked across the market is now available, Myers said. Developers had once proposed tens of millions of square feet of new projects. Thankfully, all of it didn’t pan out, he said.
Still, Myers said, developers have delivered more than 20 million square feet of new lab space in recent years — and much of it remains empty.
Construction and rent costs
Construction of office and lab spaces is stalling due to high vacancy rates and rising material and labor costs.
“All of the big speculative buildings, they’re built, they’re in the ground,” Myers said.
“I know there’s still some construction out there,” he continued. “There are some renovations taking place, but the fact that the big speculative towers are built means that there’s not a lot of empty, unspoken for space that’s still in the pipeline.”
Additionally, tenants strongly prefer high-quality, top-tier products, which the rent reflects.
Asking rents for Class B properties in Boston are off by at least 15% from peak levels, Myers said. However, Class A rents have held steady. (Class A buildings are premium, modern buildings with top-tier amenities, while Class B buildings are generally older but functional.)
However, Myers said, concessions not reflected in the Class A rent data include a few months of free rent and other favorable tenant packages.
Class A tenants have access to nearly 10 million square feet of space. About 1 million of that is in the three newest projects: the South Station Tower, the Winthrop Center, and 10 World Trade.
“There’s so much competition for tenants in the market right now in the city of Boston,” Myers said.
The return-to-office mandates
Even though an increasing number of companies are approaching what may be the final return-to-office policies, Myers said they are still evolving.
With the labor market tightening and unemployment rising, companies have greater leverage to tell their employees to return.
“I believe we will still have room to increase,” he said.
Recent reports indicate Boston is lagging behind in return-to-office policies.
However, McMullan noted that the Cushman & Wakefield report showed the first positive net absorption (or more space occupied than sitting empty) in the total market since 2023, with fourth-quarter absorption totaling 80,500 square feet. In total, the market recorded 7.6 million square feet of leasing activity in 2025, indicating stabilization in the office market.
“I think we are far enough removed from COVID that the return to office – it’s not really part of the conversation anymore,” McMullan said. “We’re not entering into a new normal. I think everyone’s come to terms with this is the new normal.”