BOSTON— Greater Boston’s office market is showing early signs of stabilization, but the path to recovery remains uneven across its key geographies. According to Colliers’ Q2 2025 Office Market Report, core urban centers like Boston are holding steady, while Cambridge and the Suburbs continue to struggle with historically high vacancy rates and sluggish demand.
Boston: A Steady Core with Select Bright Spots
The City of Boston has emerged as the most stable office submarket in the metro area. Over the past year, the total availability rate has hovered between 23.4% and 23.6%, reflecting a halt to the sharp post-COVID increases seen in earlier quarters. Sublease availability has dropped 17% since its peak in early 2024 and now stands at 3.2 million square feet. However, the improvement is somewhat tempered by a rise in direct availability, which now totals a record 13.3 million square feet, according to Colliers.
Despite this, Class A buildings are outperforming the broader market. Over the past 12 months, these top-tier assets, including newly delivered projects, have seen nearly 970,000 square feet of positive absorption.
Several notable leases highlight the cautious but ongoing demand. Marketing software firm Klaviyo inked the largest deal of the year so far, expanding its headquarters with a 250,000 SF lease at 125 Summer Street. Flexcar moved into a larger 16,000 SF space at 60 State Street in June, while Volition Capital signed on for 21,000 SF at 699 Boylston in the Back Bay.
Class A asking rents have remained relatively firm, while Class B rents have declined by 18% compared to pre-pandemic levels. However, new supply could pressure even high-end properties. Two major projects—South Station Tower and 10 World Trade—are expected to deliver a significant amount of unleased space later this year, with only 10% pre-committed so far. Additionally, Fidelity’s upcoming move back into the renovated Commonwealth Pier means more than 800,000 SF at 245 Summer Street will need to be backfilled.
Cambridge: Record Vacancies in a Traditionally Tight Market
Long one of Boston’s tightest office submarkets, Cambridge is now facing unprecedented vacancy levels. The total availability rate hit 26.2% in Q2—more than double its historical average of 12.1% and the highest rate ever recorded for the area.
Leasing activity remains muted. The early termination and renegotiation of Forrester’s lease at 60 Acorn Park, which reduced its footprint by 74,000 SF, added yet another large block to the market. Forrester’s new lease included significant concessions: six months of free rent and a $147/SF tenant improvement allowance.
Cambridge’s flagship project, 40 Thorndike, a 422,000 SF Class A tower in East Cambridge, has yet to land a single tenant since its completion last year. Asking rents have declined approximately 10% from their 2020 peak, but space in Cambridge still commands a premium. Class A rents in East Cambridge average $85/SF, 15%–20% higher than comparable space in Boston’s Back Bay or Seaport.
Suburbs: Large Deals and Residential Conversions Offer Hope
The suburban office market, while still tenant-favorable, saw some encouraging developments in Q2. Total availability rose only slightly—by 10 basis points—marking one of the most stable quarters in the past three years.
Large leases are providing some momentum. Cybersecurity firm CyberArk signed an 86,000 SF lease at 140 Kendrick Street in Needham, while defense technology company Anduril committed to 160,000 SF at 1050 Winter Street in Waltham—two of the biggest suburban deals this year.
Efforts to convert underperforming office assets into residential space may further help reduce long-term supply. A notable example is the proposed redevelopment of the high-vacancy 245-265 Winter Street property in Waltham into a 300+ unit apartment complex, which began the approval process this quarter.
Sublease dynamics are shifting as well. Some previously long-vacant listings have finally found takers, such as TripAdvisor subleasing over 130,000 SF to Advisor360˚ and Hyannis Port Research. However, new sublease space continues to emerge, like Evolv’s recent 47,000 SF offering at 10 CityPoint.
Metro-Wide Outlook: Stabilization, But Not Yet Recovery
Across Greater Boston, the office market appears to be entering a period of stabilization rather than full recovery. The metro-wide availability rate now stands at 24.1%, up slightly from Q1 but no longer surging. Negative net absorption persists, but at a slower rate, and some tenants are showing renewed interest in expansion, especially in Class A product.
However, demand drivers remain subdued. Venture capital funding for local tech firms—previously a major engine of office growth—has dropped 73% since 2021. The region also saw a net loss of 2,000 jobs across its three primary office-using sectors over the past year, although the financial sector has posted modest employment gains.
In conclusion, there are more signs of life in the market now than at any time since the pandemic began. Boston remains a bellwether. If it can continue to attract high-profile tenants and absorb new supply, other markets will follow.
