Boston Office Market
Despite remaining well above historic norms, office vacancies in Greater Boston have only increased by 60 basis points since the end of 2024, marking the lowest three quarter-increase since late-2021. Large-block transactions gained momentum in the third quarter of 2025, with the top six deals each exceeding 100,000 SF. Direct leases continue to gain share of overall activity in the CBD, accompanied by an increase in average lease term this quarter, reflecting greater tenant confidence in the urban office market. Suburban office market fundamentals have prompted many owners to pursue residential conversions of existing assets. However, select owners are focused on building out industrial-R&D/Flex space. The financial, non-banking sector surpassed the legal sector in office demand in the CBD this quarter, representing roughly 19.0% of active requirements, or roughly 862,000 SF of the 4.5 million SF currently tracked. Average asking rents across the metro rose 1.6% quarter-over-quarter, driven primarily by new construction activity that continues to elevate lease rates within the Class A sector. Capital markets across Greater Boston are showing signs of renewed activity, with an increasing volume of owner-user acquisitions and lender-facilitated transactions coming to market.
Download Boston Office Market Report 3Q25Boston 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.