JLL: Despite Office Vacancy Hitting 20%, Boston’s CRE Fundamentals Showed Reasons for Optimism in 2024

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Boston (PhotoL JLL)

BOSTON– A recent report from JLL (5 big things we’re watching in 2024), along with Q4 2023 outlooks (officelife sciences, and industrial) and commentary provides insights into how the CRE trends JLL is watching for 2024 present challenges while heralding exciting opportunities and shifts in the commercial landscape, and fundamentals show signs of growth – and how the numbers and outlooks translate to on the ground activity.

Boston’s office vacancy reached 20% by the end of 2023, but Boston’s CRE fundamentals showed reasons for optimism in 2024. Including a surge in demand coming from the types of anchor tenants that have historically driven leasing velocity in the suburbs.

Additionally, the enforcement of return-to-office policies, with leaders tying bonuses and promotions to in-person attendance, will also be influencing the office market in 2024.

While demand for life sciences spaces is expected to surge, the supply landscape will lead to record-high vacancies throughout the year – and JLL leaders expect substantial life sciences recovery in the second half of 2024, largely driven by a surge in venture capital investment (Boston biotech raised nearly $9 billion in 2023).

And despite a shrinking industrial pipeline, larger users are anticipated to re-enter the market later in the year after re-evaluating supply chains and macroeconomic conditions.

 Some of these trends include:

  • Office: Despite a 20% vacancy rate in Boston at the close of 2023, optimism remains high for the year ahead, driven by increased demand from anchor tenants and bonus incentivized and stricter return-to-office policies that will reshape market dynamics.
  • Life Sciences: Life sciences reached a 20-year high vacancy at the end of 2023, yet life sciences space demand is expected to recover in the second half of 2024, largely driven by VC investment (Boston’s biotech raised nearly $9 billion in 2023)
  • Industrial Trends: Positioned well for an anticipated resurgence, as larger entities reassess and re-enter the market, adapting to evolving supply chain and economic conditions.
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