BOSTON – Cushman & Wakefield released its fourth quarter 2024 statistics for Greater Boston, offering insights into the state of the region’s office, life sciences and industrial markets, as each sector displayed unique challenges and opportunities as market conditions continued to shift over the fourth quarter.
“The office market’s dynamics reflect a shift towards stability, with renewals leading the way,” said Riley McMullan, Senior Research Manager. “Tenants continue to prioritize highly amenitized assets and prime locations to adapt to changing workplace strategies.”
The Greater Boston office market ended 2024 with an overall vacancy rate of 17.0%, marking a record high and reflecting a year-over-year (YOY) increase of 310 basis points (bps). This was a sharper rise than the 250-bps increase recorded in 2023. The impact was particularly acute for Class A assets, which saw a 370-bps increase in vacancy, while Class B properties experienced a 230-bps rise.
Renewals dominated transaction activity through 2024, with nearly 4.3 million square feet (msf) of renewal deals completed. This represented 46.1% of all transactional activity, a significant increase over 2023’s share of 24.4%. New leasing activity, however, was subdued, totaling 5.1 msf and falling short of the prior year by 1.2 msf.
Overall asking rents rose 3.6% YOY, driven primarily by suburban submarkets, which posted a 3.7% increase. Conversely, rents in the Central Business District (CBD) fell by 1.6%, signaling a shift in leasing preferences. Interestingly, Class B assets led in rent growth, climbing by 6.7% YOY compared to just 1.8% growth for Class A properties.
“The life sciences sector is adjusting to new market realities, with a focus on strategic renewals,” said Vice Chair Connor Barnes, who leads the firm’s Boston Science, Technology and Emerging Markets team. “Despite the challenges, there remains strong demand in key submarkets, with East Cambridge continuing to attract tenant interest.”
Greater Boston’s life sciences sector experienced its tenth consecutive quarter of rising vacancy, finishing 2024 at 30.3%, a 770-bps increase YOY. This marked the first-time vacancy surpassed the 30.0% mark, driven largely by new projects delivering vacant into the market. Total vacant space now exceeds twice the three-year market average.
As with the office market, renewals outpaced new leasing in the life sciences sector, comprising 56.5% of total transaction volume. Fifteen large tenants occupying spaces over 50,000 square feet each renewed their leases throughout the year.
Market normalization also brought a decline in overall asking rents, which fell 10.5% YOY to $82.95 per square foot (psf) NNN. This trend was most evident within the Urban Ring, where asking rents dropped by 11.3% YOY.
“Industrial market trends indicate a recalibration, with a focus on strategic locations,” said McMullan. “Demand is still concentrated in key submarkets, even as broader market dynamics shift.”
The industrial sector mirrored broader market trends with a steady increase in vacancy, ending the year at 9.4%, a 170-bps YOY rise. Vacancies in warehouse/distribution assets saw a sharper spike, increasing by 230 bps. Despite this, three submarkets – 495 North, Urban West and Urban South – posted improvements in vacancy levels.
Overall asking rents for all industrial product decreased slightly, closing 2024 at $15.07 psf NNN, down from a mid-2023 high of $15.49 psf. Similarly, warehouse/distribution asset rents fell to $14.92 psf, a 1.2% decline since mid-2023. The Urban Ring continued to command the highest rates across the region, reflecting the submarket’s supply constraints and high demand for quality industrial space.
Construction activity for industrial properties slowed compared to prior years, with 3.9 msf of new product delivered in 2024, much of it uncommitted speculative warehouse/distribution space.
“Greater Boston’s office, life sciences and industrial markets each showcased significant shifts in 2024. While vacancy rates have risen across all three sectors, strategic renewals and supply adjustments suggest the markets are adapting to new equilibrium points,” added McMullan.
