BOSTON–New data from JLL’s Q1 2026 office outlook suggests that while the Boston office market continues to grapple with high vacancy, early indicators point to a gradual recovery—particularly at the top end of the market.
One of the most notable shifts this quarter is a structural change in supply dynamics. For the first time on record, direct availability has fallen below overall vacancy, signaling that office space is increasingly being absorbed, repurposed, or reintroduced to the market rather than remaining idle. This marks a subtle but meaningful step toward stabilization after years of pandemic-driven disruption.
Still, overall vacancy remains elevated at 24%, underscoring the uneven nature of the recovery.
At a Glance (Source: JLL)
Key Market Metrics (Q1 2026)
- YTD Net Absorption: −146,503 s.f. (improving trend)
- Total Vacancy: 24.0% (slightly declining)
- Class A Direct Asking Rent: $51.42 p.s.f. (stable)
- Overall Direct Asking Rent: $45.72 p.s.f. (stable)
- Concessions: Stable
- Under Development: 894,395 s.f. (declining pipeline)
- Preleased Space: 100.0% (fully committed pipeline)
Top-Tier Properties Lead the Way
High-quality office space continues to outperform. A major highlight of the quarter was a 250,000-square-foot lease by JPMorgan Chase at South Station Tower. The deal effectively eliminates the last available new-construction high-rise office space in the city, reflecting strong demand for premium buildings in prime locations.
This trend reinforces a growing divide in the market: top-tier properties are leasing up quickly, while lower-quality buildings struggle to attract tenants.
Rents Shift as Market Rebalances
Average asking rents declined by 1.5% in the first quarter, but the drop is less about weakening demand and more about changing inventory. As premium spaces are leased, they are being replaced in the availability pool by older, lower-cost properties. In fact, newly available Class A spaces entering the market were priced roughly 45% lower than those that were leased during the same period, highlighting a widening quality gap.
As premier buildings fill up, leasing activity is beginning to spill over into the next tier of properties—particularly those undergoing renovations or offering upgraded amenities and workplace experiences.
A Bifurcated Market Takes Shape
The data points to a “two-speed” office market. While top-tier assets show tightening conditions, a growing share of vacancy is concentrated in lower-quality buildings. Analysts note that vacancy rates tend to lag real-time leasing activity, meaning current figures reflect decisions made months earlier. More recent leasing trends suggest improving momentum that has yet to fully register in headline statistics.
Leasing Activity Holds Steady Amid Headwinds
Several large transactions helped sustain leasing activity in Q1. In the suburbs, Keurig Dr Pepper renewed a 274,000-square-foot lease in Burlington, while AI firm Tutor Intelligence signed a 36,000-square-foot lease in Watertown. These deals point to continued corporate commitment to the region, even amid broader economic uncertainty.
Boston’s growing artificial intelligence sector is also expected to contribute to future demand, supported by the area’s strong talent base and increasing investment in emerging technologies.
Outlook: Gradual Improvement Ahead
Looking forward, JLL expects the strong leasing momentum from 2025 to carry into 2026, helping to reduce vacancy and increase absorption. While challenges remain—particularly for older office stock—tightening conditions in top-tier buildings could begin to shift leverage back toward landlords in select segments.
The broader takeaway: while vacancy remains high, the Boston office market is showing early, tangible signs of recovery. Momentum is building at the top—and may soon extend more widely across the market.
