BOSTON – As the commercial real estate sector continues to adjust to post-pandemic realities, the latest insights from JLL’s Office Outlook for Greater Boston show both positive momentum and ongoing challenges in the city’s office market. Despite some promising signs, the road to full recovery remains long.
According to JLL, Boston’s office market has shown improvement in the first quarter of 2025, marking the third consecutive quarter of declining vacancy rates. The region’s total office vacancy rate dropped to 22.5%, with Class A office space in the city seeing an even sharper decrease, down to 19.8%. Leasing activity also saw a strong uptick, with a 39.8% increase in leasing velocity compared to the same period last year, indicating sustained demand for office space.
Key Highlights from JLL’s Q1 Report:
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Tech Sector Reemerges:
One of the most significant deals of the quarter was Klaviyo’s renewal and expansion of 256,000 square feet at 125 Summer Street. This deal represents one of the largest downtown leases since the pandemic, signaling a revival in the tech sector’s office demand. -
Seaport Tightens Further:
The Seaport submarket continues to perform strongly. Nine of the 14 Class A buildings in the area are now fully leased, with a sub-5% direct vacancy rate, a remarkable figure that highlights the high demand in this prime waterfront district. -
Suburban Strength:
Leasing activity wasn’t confined to Boston proper. Major deals in the suburbs helped fuel the office market’s recovery. Commonwealth Financial Network leased 151,000 square feet in Waltham, Global Partners took 100,000 square feet in Newton, and Advisor360 signed a deal in Needham, contributing to the trend of large-block leasing outside the city. -
Looking Ahead:
Despite the positive signs, challenges remain. Two of the most notable upcoming office developments – South Station Tower and 10 World Trade – are set to be delivered later this year. These projects could increase the vacancy rate if they don’t attract enough pre-leasing activity in the coming months. The future success of these developments, and the overall health of the Boston office market, will depend on the level of leasing momentum in the second quarter.
A Mixed Outlook for the Boston Office Market
While the data suggests some optimism, the market is still far from fully recovering. The decrease in vacancy rates and the surge in leasing activity are promising, but the total office market remains weighed down by lingering challenges, including the slow return of office workers and the impact of remote work on demand for office space.
The upcoming completions of South Station Tower and 10 World Trade are pivotal moments for the market. If pre-leasing momentum continues, they could inject further activity into the market. However, a lack of sufficient pre-leasing could contribute to an increase in vacancy rates.
As businesses continue to reassess their real estate needs, the overall future of the Boston office market hinges on the industry’s ability to balance new supply with demand, especially as more deals are expected to be signed in the second quarter.
For now, JLL’s report provides a cautiously optimistic outlook for the Boston office market, but one that acknowledges the work still to be done. The market is on the path to recovery, but only time will tell how long that recovery will take.
