Boston Market Reports

Boston Office Market

Conditions in Greater Boston’s office market worsened during the first quarter of 2023. Occupancy losses of over 1.5 million square feet marked the largest single-quarter decline since the pandemic, and metro area vacancies remained on their upward trend. Blue-chip tech and biotech tenants continue to add to sublease inventories, as sublease availabilities throughout the metro reached their highest total in two decades. The collapse of Silicon Valley Bank further impacted tenants within the TAMI sector, as funding and startup lending has dissipated since the beginning of March. Some office users have begun touring space in lab buildings, while landlords are holding lab rents for those requirements. A few large tenants returned to the market, which contributed to the uptick in demand, led by Lego announcing its relocation plans to Boston.

Boston Industrial Market

Greater Boston’s industrial market softened during the first quarter of 2023 amid significant macroeconomic headwinds. As a result of decelerating demand, net absorption returned to a deficit with negative 918,228 square feet. Average asking rents fell for the first time in over five years, closing the first quarter of 2023 at $15.07/SF NNN. Though overall rent growth has slowed, the asking rate for Class A product, particularly the Warehouse/Distribution subtype, continues to hold near-historic highs. As a result of a strong quarter of new construction deliveries, vacancies increased to 4.6%. With nearly 3.0 million square feet of new projects set to deliver in the core metro throughout the remainder of the year, this new supply should offer some relief to Greater Boston’s market, which has been constrained by various geographic and political limitations.