BOSTON— The Boston office market is increasingly favoring tenants, with companies locking in longer leases and upgrading to premium space, according to a new first-quarter report from Avison Young.
While overall leasing activity slowed during the first three months of 2026, the report points to a more important shift in tenant behavior—greater clarity around workplace strategies and a willingness to make long-term commitments.
“Leasing activity may have slowed this quarter, but the bigger story is how tenants are behaving,” said Nils Taylor. “Companies have a much clearer picture of how they’re using space, and that’s translating into longer-term commitments and a willingness to invest in higher-quality environments.”
Longer Leases Signal Confidence
The average lease term rose to 81.4 months in the first quarter, the highest level since 2019. The increase reflects companies solidifying return-to-office (RTO) policies and committing to physical workplaces after several years of uncertainty.
Nearly 70% of leasing activity came from new deals, signaling renewed occupier confidence and a shift away from short-term extensions that characterized earlier phases of the post-pandemic market.
Tenant-Friendly Economics Persist
Despite improving sentiment, market conditions remain highly favorable for tenants. The gap between full-service asking rents and net effective rents widened to $11.40 in downtown Boston—the largest spread in nine years.
That gap is being driven by aggressive concession packages, including free rent and significant tenant improvement allowances, as landlords compete to fill vacant space.
Flight to Quality Accelerates
One of the clearest trends in the report is the continued “flight to quality,” with tenants gravitating toward top-tier, amenity-rich buildings.
Trophy office assets recorded 143,378 square feet of positive net absorption in the quarter, significantly outperforming the broader market. In contrast, Class A properties saw negative absorption of 130,947 square feet, while Class B and C buildings posted an even steeper decline of 380,211 square feet.
This divergence highlights a growing divide in the market, as companies consolidate their footprints but invest more heavily in premium space to attract and retain employees.
Downtown Boston Leads Activity
Boston’s central business district (CBD) accounted for the largest share of leasing activity, totaling approximately 784,000 square feet in the first quarter. The concentration of activity in the CBD reflects continued demand for centrally located, high-quality office environments.
Market Reset Continues
The report suggests that while leasing volumes may fluctuate in the near term, the Boston office market is entering a more stable phase. Companies are making more deliberate, long-term real estate decisions, supported by clearer workplace strategies and evolving employee expectations.
For tenants, the current environment offers a rare opportunity: access to high-end office space with favorable financial terms. For landlords, however, the pressure remains to differentiate assets and offer competitive incentives in an increasingly selective market.
