BOSTON— Boston’s commercial real estate market is entering the second half of 2026 with encouraging signs across both the office and life sciences sectors, according to JLL’s second-quarter market reports. While the office market has posted its strongest occupancy gains since before the pandemic, the region’s lab market is beginning to show renewed tenant demand after several years of oversupply and slowing leasing activity.
The reports suggest the office recovery is becoming more established, while the life sciences sector may be reaching an inflection point as biotech funding improves and tenant activity accelerates.
Office market records strongest first-half performance since 2019
Boston’s office market recorded positive net absorption for a second consecutive quarter, marking the first back-to-back quarters of occupancy gains since 2019, according to JLL. Net absorption totaled nearly 591,000 square feet during the first half of 2026.
Downtown Boston accounted for nearly 242,000 square feet of positive absorption in the second quarter, making it the city’s second-best quarter for occupancy gains in the past four years. The improvement was driven by several major relocations and expansions, including Schneider Electric’s move into its North American headquarters at Winthrop Center, ServiceNow’s occupancy at Hub on Causeway, the Commonwealth of Massachusetts expanding at 100 Summer Street, DataDog’s renewal and expansion at 225 Franklin Street, and Weil, Gotshal & Manges relocating to 1001 Boylston Street while increasing its footprint.
Suburban markets also experienced renewed momentum, led by headquarters relocations. Among the largest transactions was Rockland Trust’s move to 1 Technology Place in Rockland, where the bank expanded its office footprint by 37% with a new 137,000-square-foot headquarters.
JLL also found that leasing activity continues to favor existing tenants, with seven of the 10 largest office transactions during the quarter consisting of lease renewals rather than relocations.
The report highlighted continued strength in Boston’s highest-quality office buildings. Direct availability in top-tier properties has declined to 8.6%, while new leases in that segment now average more than 10 years, suggesting landlords of premium buildings are beginning to regain pricing power even as broader market conditions remain competitive.
Lab market sees surge in tenant demand
While Boston’s life sciences market continues to face elevated vacancy and downward pressure on rents, JLL reported several indicators suggesting demand is beginning to recover.
The number of companies actively searching for urban laboratory space increased 75% during the second quarter, rising from 28 to 49 active tenants. According to JLL, that represents the highest level of tenant demand in nearly four years.
Lab leasing activity remained robust during the first half of the year, totaling approximately 2.4 million square feet, the second-highest first-half leasing volume on record. A significant contributor was Sanofi’s early extension of approximately 900,000 square feet at Cambridge Crossing.
JLL also reported that more than 1 million square feet of letters of intent are currently in negotiation, helping reduce available laboratory space by roughly 400,000 square feet. Direct laboratory availability has declined to approximately 14.2 million square feet, about 1 million square feet lower than a year ago.
Although overall absorption remained relatively flat during the quarter, newly constructed laboratory buildings outperformed the broader market, recording approximately 1 million square feet of positive absorption during the first half of 2026 as tenants gravitated toward move-in-ready, high-quality facilities.
Biotech funding adds optimism
JLL said improving capital markets are also supporting the region’s life sciences outlook. Greater Boston biotechnology companies recorded one of their strongest funding periods in recent years through initial public offerings, secondary offerings and venture capital investment.
The report also pointed to several billion-dollar acquisitions involving biotech companies, including Apogee, Kelonia, Apellis, KalVista, PathAI and Nuvalent, as evidence of continued investor confidence in the region’s innovation ecosystem.
Despite the improving demand picture, JLL expects laboratory rents to remain under pressure for another 18 to 24 months as developers continue to work through an oversupply of available space. However, the brokerage believes rising tenant activity, increased funding and a growing pipeline of pending leases indicate the market has begun a gradual recovery.
“The recovery has begun in earnest,” JLL concluded in its outlook, noting that the primary question facing the market is how long it will take before laboratory leasing economics stabilize.
