MSCI: Boston CBD Sees Largest Drop In Commercial Property Prices Of Any Global City

Boston skyline

A series of sales has made clear downtown Boston's property values are falling, and a new report found it suffered the largest price decrease in the world last year.

Property prices in Boston's central business district in the fourth quarter were down 30.4% year-over-year, according to MSCI's RCA CPPI Global Index report.  The Global Cities Composite Index fell 5.9% year-over-year.

Boston's central business district decline was sharper than any other city MSCI tracked with its Commercial Property Price Index. Central Chicago saw an 11.7% decrease, Central D.C. saw a 14.7% decrease, Manhattan saw a 2.5% decrease and San Francisco saw a 24% decrease.

The report broke down pricing by CBDs and metro area. It found the Boston metro area had a 7.5% price decline, which wasn't the worst. The Chicago, D.C. and San Francisco metro areas all had bigger declines.

"MSCI’s Price Expectations Gap model indicates a significant gulf between buyer and seller expectations for the vast majority of global cities tracked," the report stated. "Further pricing declines in 2024 should go some way to helping potential buyers and current owners meet in the middle."

Boston's price drop comes as its office market continues to see distress, with predicted valuations and recent sales painting a weak picture of the future of the market.

Earlier this month, Tufts University put out a report that stated Boston office values are expected to fall roughly 30% by 2029, leading the city to lose $1.5B in tax revenue in the next five years.

In Q4, Boston saw its lowest level of office leasing activity for the year with a 47.5% decrease from 2022 and a 17% office vacancy rate.

A 38K SF building on West Street sold for a 74% discount in October, an office building near TD Garden sold for a 40% discount in January to Rhino Capital Advisors LLC and Synergy Investments acquired One Liberty Square for $45M, representing a 17% discount.

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