BOSTON— Boston’s office market is showing signs of stabilization, with vacancy declining in several submarkets, demand outpacing new supply and investment sales increasing, according to a fourth-quarter report released by commercial real estate firm Marcus & Millichap.
The report found that the Boston metropolitan area recorded its first year-over-year decline in office vacancy since 2022. Suffolk County led the improvement, with more than 1.3 million square feet of positive net absorption during the first half of 2026. Its vacancy rate fell from 21.6% in June 2025 to 20.4% in June 2026.
Vacancy also declined in eight other submarkets, while Worcester continued to report a relatively low rate of 12.5%. Cambridge, however, saw its vacancy rate rise 2.5 percentage points over the year to 22.8%, highlighting uneven conditions across the region.
Class A office buildings recorded the strongest occupancy gains. Their metropolitan-wide vacancy rate declined 1.6 percentage points year over year to 24.4%. The vacancy rate for Class B and C properties stood at 14.8%, with little overall improvement during the same period.
“Boston’s office market is showing more signs of stabilization, with vacancy improving in several submarkets and demand beginning to outpace new supply,” said Dan Karp, associate director of investments at Marcus & Millichap’s Boston office. He said the recovery remained selective, with better occupancy trends at well-located buildings offering quality space.
About 3 million square feet of office space was expected to be completed during the remainder of 2026, according to the report. Major projects include the Alexandria Center for Life Science in Longwood-Fenway, developments at 585 Kendall and 290 Binney Street in Cambridge, and Innovation Square Phase III in the Seaport. Several projects were already leased or nearly leased ahead of completion.
Office investment activity also increased. Sales volume over the preceding 12 months reached $2.2 billion across more than 200 transactions through mid-2026, approximately 30% higher than a year earlier.
At the same time, average office property prices fell from more than $370 per square foot in 2022 to about $283 per square foot by mid-2026. The average capitalization rate rose from 6.7% to 7.7%, reflecting changes in property valuations and investor return expectations.
Karp said investors continued to assess properties selectively, purchasing both well-leased buildings and properties with vacancies that could offer longer-term opportunities.
The report also identified employment trends as a factor affecting office demand. Education and health services accounted for more than 625,000 jobs, or about 22% of metropolitan employment. However, professional and business services and financial activities remained below their 2022 employment peaks, while uncertainty over research funding and weakness in parts of the life sciences sector could weigh on demand.
The report was published by Marcus & Millichap, a commercial real estate brokerage and investment services firm, as part of its quarterly analysis of the Boston metropolitan office market.
