Boston Commercial Office Space for Rent

Q4 2025

Boston Commercial Real Estate Market Report

Focus: Q4 2025 Market Trends

Executive Summary

The Boston commercial real estate (CRE) market in late 2025 is defined by a "turning point" in fundamentals, with key sectors showing resilience despite supply-side pressures [3]. The Office market faces a paradox: vacancy has reached historic highs due to the delivery of the final wave of speculative towers, yet leasing velocity and net absorption have surged as tenants flock to these new trophy assets [2, 3]. Industrial recorded its first quarter of positive net absorption in nearly two years, signaling a recovery in demand [4]. Retail remains exceptionally stable with one of the lowest vacancy rates in the country, despite headwinds from national pharmacy closures [1]. Multifamily is absorbing a supply peak, with strong demand keeping vacancy manageable as construction starts to taper [5].

TenantBase Proprietary Data [6] highlights the distribution of active tenant demand over the last 90 days (284 total deals):

  • Retail/Storefront dominated market activity with 63.73% of all searches [6].
  • Warehouse was the second most active sector at 28.17% [6].
  • Office accounted for 8.80% of total search volume [6].

Office Market

Market Overview Boston's office market is witnessing a distinct "flight to quality," where top-tier buildings are nearing full occupancy while commodity space struggles. The delivery of major projects like South Station Tower and 10 World Trade has temporarily pushed vacancy upward, but leasing momentum is accelerating [2].

  • Vacancy & Availability: The overall vacancy rate rose to 23.6% in Q3 2025 due to 900,000 SF of new speculative deliveries [2, 3]. However, Downtown availability tightened to 22.6%, and sublease inventory declined for the eighth consecutive quarter [2].
  • Net Absorption: The market recorded a "soaring" positive net absorption of 796,968 SF in the Downtown core, the highest in five years [2]. Suburban markets also posted robust positive absorption of 306,523 SF [3].
  • Rental Rates: Average asking rents in the CBD increased to $68.75 per SF, with Class A rents jumping to $75.51 per SF [2].
  • Market Drivers: Leasing velocity hit a five-year high of 4.6 million SF in Q3, driven by relocations rather than just renewals, including major deals by Hasbro and KKR [2, 3].

TenantBase Activity [6]

  • Demand Share: Office accounted for 8.80% of total search volume [6].
  • Lease Term Preference: Demand is split between short-term agility and mid-term commitment [6]:
    • 2-3 Years: 31.82% of deals [6].
    • Less than one year: 27.27% of deals [6].
    • 3-5 Years: 22.73% of deals [6].
  • Size Requirements: Tenants seeking short-term leases are looking for smaller footprints. The average lower SF required for a Less than one year term is 1,167 SF, compared to 1,700 SF for a 3-5 Years term [6].

Industrial & Warehouse Market

Market Overview The Greater Boston industrial market has reached an inflection point, posting positive net absorption for the first time since late 2023 as tenant demand recovers [4].

  • Vacancy & Rent: Vacancy rose slightly to 7.8% as new construction outpaced absorption, marking the 14th consecutive quarter of increases [4]. Despite this, asking rents ticked up to $16.11 per SF NNN [4].
  • Demand & Supply: Net absorption turned positive in Q3 2025, buoyed by a 57% year-over-year increase in leasing activity [4].
  • Construction: Deliveries totaled 800,000 SF in the quarter, but the active pipeline has shrunk to its lowest level since 2019, which will help tighten the market in 2026 [4].
  • Leasing Highlights: Activity was driven by renewals and expansions, including major leases by DXL (674,000 SF) and NEFCO Construction Supply [4].

TenantBase Activity [6]

  • Demand Share: Warehouse accounted for 28.17% of total search volume [6].
  • Lease Term Preference: Demand is heavily concentrated in the 3-5 year range [6]:
    • 3-5 Years: 36.67% of deals [6].
    • 1-2 Years: 23.33% of deals [6].
    • 2-3 Years: 23.33% of deals [6].
  • Size Requirements: The average lower SF required for a 3-5 Years term is 2,643 SF, with upper requirements averaging 8,214 SF, indicating demand for small-to-mid-bay space [6].

Retail Market

Market Overview Boston's retail sector remains a fortress of stability, boasting the second-lowest vacancy rate among major U.S. markets despite recent pharmacy consolidations [1].

  • Vacancy & Availability: The vacancy rate rose modestly to 3.3%, driven by the closure of over 1 million SF of pharmacy space (Walgreens, CVS, Rite Aid) earlier in the year [1].
  • Rents: Average asking rents increased 1.6% year-over-year to $22.32 per SF, supported by fierce competition for prime urban space [1].
  • Construction: New supply is virtually non-existent, with only 108,000 SF delivered over the past 12 months—the lowest total on record [1].
  • Performance: Urban corridors like Newbury Street and the Seaport continue to thrive, offsetting pockets of softness in suburban strip centers [1].

TenantBase Activity [6]

  • Demand Share: Retail/Storefront activity dominated with 63.73% of all search volume [6].
  • Lease Term Preference: Retail tenants show a decisive preference for long-term stability [6]:
    • 5+ Years: 33.90% of deals [6].
    • 3-5 Years: 27.12% of deals [6].
    • 2-3 Years: 16.95% of deals [6].
  • Top Locations: Tenant interest is highest in the following hubs (deal counts) [6]:
    • Boston (City): 25 [6].
    • Cambridge: 7 [6].
    • Woburn: 5 [6].

Multifamily Market

Market Overview The multifamily market is demonstrating resilience, absorbing a significant wave of new supply while maintaining rent growth that outperforms the national average [5].

  • Vacancy & Occupancy: Vacancy held steady at 6.2% as strong absorption of 2,600 units nearly matched new deliveries [5].
  • Rents: Annual rent growth moderated to 1.2%, with asking rents averaging $2,930 per month [5]. The South Boston/Seaport submarket led with 4.9% growth [5].
  • Construction: The pipeline remains active with roughly 13,000 units underway, but new starts have slowed, signaling a supply contraction in 2026 [5].
  • Investment: Sales volume reached $904 million in Q3, with per-unit pricing averaging $450,000—double the national figure [5].

2026 Outlook

Looking ahead to 2026, the Boston market is positioned for a period of tightening fundamentals and renewed optimism.

  • Supply Correction: With construction starts down across office and multifamily sectors, the supply wave will crest in 2025, leading to lower vacancy and stronger landlord pricing power by 2026 [3, 5].
  • Industrial Balance: The sharp reduction in the industrial pipeline (lowest since 2019) will allow demand to catch up, stabilizing vacancy and reigniting rent growth [4].
  • Investment Recovery: As interest rates stabilize and fundamentals improve, transaction volume is expected to accelerate, particularly for multifamily and industrial assets [5].

Sources

  1. Matthews: Boston, MA Multifamily Market Report Q3 2025
  2. CBRE: Downtown Boston Office Figures Q3 2025
  3. CBRE: Boston Suburban Office Figures Q3 2025
  4. Newmark: Boston Industrial Market Overview Q3 2025
  5. Northmarq: Multifamily Rent Growth in Boston Remains Positive
  6. TenantBase Proprietary Market Data (Boston - Last 90 Days)

Information in this report is aggregated from various third-party sources and synthesized using artificial intelligence and other research tools. While we believe these sources to be reliable, we cannot guarantee the absolute accuracy or completeness of the data. This report is intended for informational purposes to provide market insight and should be independently verified prior to any use in a real estate transaction or legal commitment.