Boston Office Market
Greater Boston recorded its thirteenth consecutive quarter of rising vacancy, though the pace of increase has slowed significantly. Tenant activity picked up in the first quarter of 2025, with a noticeable rise in tour volume across the region. While overall leasing velocity softened during the quarter, the market saw a modest uptick in new transactions, as more tenants are starting to commit to long-term leases. In Boston’s CBD, active tenant demand was 4.1 million square feet across 166 requirements. The FIRE sector represents the largest share at 37% of total demand. Sublease availability declined by 50 basis points since the start of 2024 as expiring subleases convert to direct availabilities, keeping overall inventories elevated. Face rents remain stable across the region, while landlords continue to offer more aggressive deal terms to secure transactions. Greater Boston’s capital markets are beginning to thaw, with a growing number of owner-user and lender-facilitated transactions emerging.
Boston Industrial Market
Following a second consecutive quarter of negative net absorption, Greater Boston industrial vacancies remain above the 15-year long-term average. Sublease availabilities increased to 3.3 million SF, or 1.5% of current inventory, rivaling cyclical peaks from 15 years ago. Leasing velocity softened during the quarter, and renewals accounted for most of the largest transactions executed during the first quarter of 2025. Industrial vacancies in the South Submarket surpassed 10.0% in the first quarter of 2025 and are now 150 basis points above the metro average. Tenant demand across the region ended the first quarter of 2025 at 16.8 million SF, with select larger big box retailers reengaging with the market. Development remains more measured, with square feet under construction declining consistently throughout the last year. The 1.6 million SF of industrial construction represents just 0.7% of inventory. Despite rising vacancies, asking rents for industrial space remain elevated throughout Greater Boston. At $16.64/SF as of the first quarter of 2025, lease rates are 1.4% higher than year ago levels.
Download Boston Industrial Market Report 1Q25Boston Life Science Market
Market indicators are still muddled, suggesting Greater Boston’s life science market continues to search for a bottom. The reopening of the IPO window led six local biotech companies to go public in 2024. Post initial offering performance has struggled though. Over the past year, “Big Pharma” invested more in mergers and acquisitions than in 2022 and 2023 combined. Greater Boston venture capital funding increased by nearly 47.0% during the second half of 2024, bringing annual volumes to $7.5 billion.