Strong Leasing Activity Fails To Close Boston's Office Vacancy Gap
The Boston office market ended the year with several large leases, but stubbornly high vacancy indicates that recovery may still be far off.
At the close of the fourth quarter, the area’s office market saw 1.9M SF of leasing activity, ending the year at 5.8M SF, according to data from CBRE. That figure represents the second-largest year-to-date leasing activity total in 15 years, just behind 2019.
However, even with this flurry of leasing activity, the office market still lags in vacancy rates compared to similar markets. Boston's office vacancy rate is the highest out of all major Northeastern cities, including New York, Philadelphia and Washington, D.C., the Boston Business Journal reported.
And it has stayed stubbornly high. Vacancy in Greater Boston stood at 18.9% at the end of the fourth quarter, nearly identical to the 18.8% recorded in Q3, according to CBRE.
The biggest leases of the year came from renewals and consolidations, activity that didn’t make much of a dent in the overall metro office market. Those moves may reflect the uncertainty tenants currently feel, CoStar Analyst Phil Mobley said.
"More of these larger players in particular are faced with the decision, ‘Well, do we just simply stay in place, or do we move to a building that's maybe not quite in a perfect location or not quite the class of office we are looking for?’" Mobley said.
Wayfair had the largest lease of the quarter with a 337K SF renewal and expansion at Oxford Properties' 500 Boylston St. The firm plans to consolidate operations from 784K SF at Copley Place, Banker & Tradesman reported. WilmerHale had the second-largest lease, a 201K SF renewal and downsize at 60 State St.
DraftKings followed with a 117K SF relocation to Oxford's 225 Franklin St. The online sports betting platform occupied roughly the same amount of space at 500 Boylston St.
Increased leasing activity is a good thing, but not the only key to recovery, Mobley said.
"Boston is in a little bit of a strange position where, yes, we have seen leasing increase, but the market is still struggling for vacancy to stabilize," he said.
One bright spot of the CBRE report is that urban migration into the office market hit a five-year high. Roughly 765K SF of tenants relocated their offices to Downtown Boston at the end of 2025.
Hasbro signed a 265K SF lease at WS Development's 400 Summer St. in September, relocating from Rhode Island. Other major downtown relocations include KKR's 132K SF relocation and expansion at The Chiofaro Co.'s International Place and FM Global's 50K SF at Hines' South Station Tower.
The Boston office market has almost 24% availability as of the fourth quarter, Colliers Research Director Jeff Myers said. A surplus of new space has kept that figure high.
Surplus Class-A inventory will likely be the first filled, Myers said. Roughly 1M SF of new trophy space was delivered in 2025, including South Station and 10 World Trade Center.
"What I really need to see is that pipeline getting filled with more companies that are coming in or expanding," Myers said.
Slow job growth in Massachusetts hasn’t helped, he said. Unemployment lay flat in November at 4.7%, according to Mass.gov. That metric is slightly above the national unemployment rate of 4.6%.
Myers said another issue is the continued slog in venture capital, which has slowed company creation in value-add industries such as technology and life sciences. Between 2024 and 2025, life sciences venture capital funding decreased by 13%, according to life sciences organization MassBio.
"I want to see more job creation. I want to see more venture capital happening in 2026, and that will help us to really get that recovery in vacancies moving faster in the upcoming quarters," Myers said.
