Greater Boston Office Market


Boston’s office market ended the first quarter of 2021 on a slightly more positive note than previous quarters, though the uncertain conditions of 2020 persist. The metro added a seasonally adjusted 27,100 jobs over the trailing 3-months, still not enough to fully repair the employment damage from Spring 2020, but a significant improvement over the anemic job gains of Winter 2020. Direct net absorption was again highly negative, totaling 1.8 million square feet across the metro, one of the steeper declines in recent history. Minimal direct deal activity coupled with large numbers of leases rolling allowed these steep levels of negative absorption. In the face of little activity and lingering uncertainty over the return to the office, landlords had responded in varied ways with their asking rent levels. Many landlords have dropped rents, while others have kept them the same as pre-COVID. Some are offering steep concession packages, while others have held rents constant.

Still, there are some signs of life in the market. Sublet space has halted its dramatic rise and has even declined in Boston and Cambridge. Sublet lease volume, in fact, totals the same as direct lease volume. With so much sublet space on the market, interested tenants have the freedom to go bargain hunting for space and have typically targeted quality Class A buildings. Boston received its most noteworthy development activity with Amazon’s 630,000 square foot planned build-to-suit in the Seaport. Credit office plays are starting to emerge in the investment sales market, in contrast to the riskier speculative opportunities common pre-COVID-19. More than anything, there seems to be more positive sentiment about the future than there has been in the past. Vaccines are rolling out quickly, economic stimulus is helping to buoy what had been a sagging economy, people are starting to return to the office, all leading to hopes for strong deal activity in the future.


With vaccines now being administered rapidly, it is important to speculate about what normalcy will look like post-COVID. Massachusetts ranks near the top in the country in terms of vaccine administration, with over a third of its population receiving a dose at the end of the quarter. The Baker administration plans to open vaccinations to the general public by April 19th with the hopes of being “COVID-19 independent” by July 4th. When this point happens, to what extent will remote work continue? When will most companies fully return to the office? How will companies use their offices? These questions will start to become clearer over the coming months.