The Boston office market experienced a significant decline in 2023, with negative net absorption of 6.4 million square feet – more than double the losses of the previous year. This is according to Colliers’ Q4 2023 report on the Boston Office Market.
In 2023, total availability increased by over four percentage points, reaching a high of 21.7%. This is higher than during other economic downturns such as the Dot-Com Bust, Great Financial Crisis and COVID recessions. Despite this weakness in the market, landlords have chosen to offer generous concession packages instead of lowering asking rents.
Although it may currently be advantageous for tenants in terms of negotiating power, there are some positive signs for landlords as well. For instance, job growth within office-using industries – particularly financial activities and professional services – continues to outpace national averages. Furthermore,
more companies are requiring employees to work from their offices more frequently which could help mitigate any potential space givebacks in the near future.
There is also limited risk for speculative office projects breaking ground at this time.
This post discusses how Boston had its worst year for net absorption since two decades ago according
to Connect CRE’s Q4 report on The Hub’s commercial real estate scene.
