BOSTON — Boston’s office market experienced a notable shift in the third quarter of 2025, as overall vacancy rose to 23.6%, up from 21.2% in Q2, according to JLL’s latest Boston Office Outlook.
The increase is largely attributed to the delivery of South Station Tower and 10 World Trade Center, the final major speculative office developments in the city for the foreseeable future, adding 900,000 square feet of new supply to an already competitive market.
Despite the vacancy uptick, leasing activity in newer, amenitized buildings accelerated, signaling evolving tenant preferences and underlying market resilience. Schneider Electric, for example, inked a 74,635-square-foot lease at Winthrop Center, relocating its North American headquarters to the heart of downtown Boston.
One of the quarter’s most high-profile deals was Hasbro’s 264,395-square-foot lease at 400 Summer Street, which marks the toy giant’s relocation from Pawtucket, Rhode Island, to Boston’s booming Seaport District. This move follows Lego’s headquarters shift to 1001 Boylston Street earlier this year, establishing Boston as the new hub for two of the world’s three largest toy companies.
Other significant Q3 transactions include:
- KKR leased 132,000 square feet at Two International Place, a move following its acquisition of Global Atlantic.
- The Massachusetts Executive Office of Health and Human Services (EOHHS) signed for 115,237 square feet at One Enterprise Drive in Quincy, reflecting strong suburban momentum.
Notably, all three of these deals involved relocations or expansions—a departure from the renewal-heavy trends of early 2025, when more than 85% of large leases were extensions of existing footprints.
This quarter marked a turning point in tenant behavior as more firms commit to moves, particularly to modern buildings that support hybrid work, wellness, and sustainability.
High-Quality Space in High Demand
While total vacancy rose due to new inventory, JLL anticipates modest vacancy declines and upward pressure on rents moving into 2026. This outlook is driven by limited future supply, a 77% quarter-over-quarter increase in full-floor tenants actively searching in the city, and strong appetite for top-tier space.
In the suburbs, leasing momentum continues in well-located, amenitized properties, with Quincy, Framingham, and Woburn expected to lead the way in absorption. The shift suggests that tenants are increasingly willing to relocate for better quality, not just better pricing.
As the current development cycle concludes with no major speculative office projects in the pipeline, the market is expected to stabilize. Still, JLL notes that competition for best-in-class buildings will remain fierce, especially among companies prioritizing employee experience, ESG goals, and long-term flexibility.
