Boston’s Commercial Real Estate Faces $2.1 Billion Loss Amid Office Value Decline
Boston could see losses of up to $2.1 billion in commercial real estate revenue as property values continue to decline, according to a new report by the Boston Policy Institute and the Center for State Policy Analysis at Tufts University. The updated study revises findings from an earlier February 2024 publication, which the authors now say was “outdated and overly optimistic.”
The new report, titled Ongoing Fallout from Boston’s Empty Offices, projects that office property values could drop between 35% and 45% compared to 2024 levels. This decrease comes in response to recent sales data and weaker-than-expected fiscal year 2025 tax collections. By contrast, the earlier report anticipated a smaller decline of 20% to 30%.
The researchers warn that the steep drop in office valuations is likely to create a widening shortfall in Boston’s municipal budget over the next five years. As the city grapples with this growing deficit, policymakers face a difficult choice: either raise property tax rates—potentially impacting homeowners—or adjust spending to align with the new fiscal reality of reduced revenue.
The report underscores the long-term implications of remote work trends and stagnating demand for office space, stressing that while Boston has limited control over market forces driving the decline, planning for its financial impact is essential.
