BOSTON— The office market in Boston is showing renewed momentum, according to a new report from Colliers, which highlights improving fundamentals alongside persistent economic challenges.
Colliers reports that the metro’s total office availability rate has declined to 23.7%, marking three consecutive quarters of improvement and a roughly 70-basis-point drop from its peak in mid-2025. Over the past nine months, the market recorded 2.1 million square feet of positive net absorption—the strongest sustained growth since 2018.
The report credits a combination of factors for the rebound, including a lack of new speculative office construction and a growing number of office-to-residential conversion projects that are helping reduce excess supply. Still, availability remains about seven percentage points above historical averages, leaving tenants with significant options, including approximately 37 million square feet of direct leasing space and an additional 8.1 million square feet of sublease inventory.
A key theme identified by Colliers is the growing divide in asset quality. Newer, high-end buildings are driving much of the recovery, capturing a disproportionate share of leasing activity. Although properties built within the past decade represent just 12% of Boston’s inventory, they accounted for 58% of occupancy gains in the first quarter.
Notable leasing activity underscores this trend. JPMorgan Chase recently committed to 250,000 square feet at South Station Tower, while other deals include moves by Weil, Gotshal & Manges, Dechra, and Bain & Company into newer or build-to-suit spaces.
Meanwhile, sublease availability has dropped to its lowest level since 2022, signaling improving tenant demand and fewer companies offloading unused space.
Despite these gains, broader economic uncertainty continues to cast a shadow over the market. Colliers notes that geopolitical tensions, including the ongoing conflict involving Iran, have contributed to rising energy prices and inflationary pressures. These dynamics have complicated monetary policy decisions and pushed the 10-year Treasury yield up to 4.3% by the end of March 2026, increasing borrowing costs for commercial real estate.
Labor market trends also present challenges. According to federal data cited in the report, the Boston metro area saw a 1.1% decline in jobs over the past year, contrasting with modest national growth. Key white-collar sectors—including finance, professional services, and technology—have all contracted, while growth in the region’s largest employment sector, education and health services, has remained modest.
Submarket performance varies across the region. In Boston proper, the first quarter marked one of the strongest absorption periods since the pandemic, with roughly 586,000 square feet removed from the market due to leasing activity and planned conversions.
In Cambridge, office demand has begun to rebound, particularly in East Cambridge, where availability has fallen nearly five percentage points from recent highs. However, the recovery remains closely tied to the performance of the technology and life sciences sectors, which continue to face reduced venture capital funding compared to peak years.
Suburban markets present a more mixed picture. Availability has edged up slightly to 24%, though several submarkets—including Route 128 corridors and Worcester—have seen notable improvements since mid-2025. Class A properties are again outperforming, while lower-tier buildings continue to struggle with elevated vacancy rates.
Colliers also highlights a shift in redevelopment strategies across suburban areas. While office-to-lab conversions were common in recent years, weaker life sciences demand is prompting landlords to explore alternatives such as multifamily housing and industrial redevelopment projects in communities like Waltham, Burlington, and Andover.
Colliers emphasizes that while the Boston office market is stabilizing, a full recovery will depend on stronger job growth and sustained demand across key industries.
