Boston Office Market
Despite remaining well above historic norms, office vacancies in Greater Boston have only increased by 20 basis points since the end of 2024, marking the lowest two quarter-increase since late-2021. While leasing velocity slowed down in the second quarter of 2025, demand was more robust during the first half of 2025 when compared to year-ago levels. Direct leases continue to gain share of overall leasing, and the average lease term is up over the quarter in the CBD, signaling more conviction from urban office tenants. The Suburban office market recorded four of the largest leases executed during the second quarter of 2025, with the Route 128 markets capturing three of those transactions. The legal sector anchors office demand in the CBD, representing roughly 16% of active requirements, or about 733,000 SF of the 4.6 million SF currently tracked. Average asking rents across the metro area fell 0.7% from last quarter, however, they remain flat compared to a year ago. Greater Boston’s capital markets continue to thaw, with a growing number of owner-user and lender-facilitated transactions emerging.
Boston Industrial Market
Leasing activity maintained its upward trajectory in the second quarter of 2025, recording a 13.9% increase compared to the same period last year. Asking rents for industrial space saw a slight decrease throughout Greater Boston. At $16.02/SF as of the second quarter of 2025, lease rates are 1.9% lower than year ago levels. Industrial vacancy in the South Submarket remained above 10.0% in the second quarter of 2025, positioning it 160 basis points higher than the metro average. Industrial development remains measured, with space under construction increasing by 7.9% quarter-over-quarter. The current 1.9 million SF underway represents just 0.9% of total inventory. Following the sixth consecutive quarter of negative net absorption, Greater Boston industrial vacancies remain above the 15-year long-term average. The Urban submarket remains the most supply constrained, continuing to boast comparatively low availability as well as the highest average asking rents. Sublease availabilities increased to 3.4 million SF, or 1.5% of current inventory, rivaling cyclical peaks from 15 years ago.
Boston Life Science Market
The life science labor markets remain sluggish, with layoffs persisting and job postings continuing to decline into early 2025. Fundamentals across the region continued to unwind this quarter, albeit at a slower pace, with slight increases to vacancy, availability, net negative absorption, and a decline in asking rents. The lack of access to capital and limited exits as well as ongoing economic uncertainty are driving tenant cautiousness, limiting overall leasing activity. Select subleases are beginning to expire and revert back to the landlords, putting upward pressure on direct availabilities. Key sector drivers such as venture capital funding and IPO activity retrenched further during the second quarter of 2025. 109 Brookline St. (300,000 SF) in the Fenway and 305 Western Ave. (254,000 SF) in Allston both delivered this quarter, adding more than 500,000 SF of new inventory to the market. Many landlords of existing and potential laboratory sites are exploring alternative uses, such as office, flex, or multifamily, due to such limited demand in the life science leasing market.