Commercial Real Estate Overview

Boston's office vacancy rose again to 19.0% in Q2 2026 — a fifth straight quarterly increase, though the smallest in over a year

⚠️ Vacancy Rising Again

7.5% (2019) → 19.0% (Q2 2026) — a 153% increase

Cushman & Wakefield Q2 2026 MarketBeat · Rents down 2.3% QoQ · Net absorption negative

📉 Construction at 20-Year Low

0 SF under construction. No speculative office projects.

Supply constraint should help vacancy stabilize over 2026-2027

Office Vacancy Trajectory

Boston overall vacancy, 2019–Q2 2026 (C&W)

Vacancy by Source — Q2/Q3 2026

Different brokerages, different methodologies — same trend

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Q2 2026: Vacancy rose 30 bps QoQ to 19.0%. Downtown at 20.8%, suburbs at 21.6% — now exceeding the metro average. 1.17M SF of new downtown leasing in Q3. Class B inventory continues to struggle.

Vacancy Deep Dive

Class A vs B divide, suburban weakness, and life sciences improvement

Class A Vacancy

18.2%

Pre-COVID

Trend

Declining

Class B Vacancy

19.0%

Pre-COVID

8.3%

Rents

Off 15%+

Suburban Clusters

21.6%

Q3 2026

Exceeds metro avg

Class A vs. Class B Vacancy

The A/B gap is narrowing — 0.8 pts in Q3 2026 (1.2 in Q2)

National Comparison

Boston vs. national and peer cities

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Construction pipeline at 20-year low: 0 SF under construction in Greater Boston. No major speculative office projects.

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Life sciences improving: Positive net absorption in Q4 2025, sublease availability down 100 bps YoY. However, biotech layoffs continue and the labor market remains sluggish.

Downtown Boston Recovery

6 consecutive quarters of declining vacancy through Q4 2025 — Q1 2026 showed a setback

⚠️ Q1 Setback After 6-Quarter Recovery

Downtown vacancy fell 60 bps to 25.3% in Q2 2026 after a Q1 uptick — down from its 28.5% peak

Newmark / Downtown Boston Alliance Q2 2026 · 1.17M SF of new downtown leasing in Q3 (CBRE)

Downtown Peak Vacancy

28.5%

Mid-2024

Pandemic peak

Year-End 2025

25.2%

Improvement

-3.3 pp from peak

Q2 2026

25.3%

Downtown

−60 bps QoQ

Downtown Vacancy — Recovery + Setback

From 28.5% peak, recovered to 25.2%, 25.3% in Q2 2026

Key Recovery Metrics

Downtown Boston revitalization indicators

Retail Vacancy

Down 50%

From Peak

Street-level filling up

Q3 New Leasing

1.17M SF

Downtown

CBRE

Industrial Vacancy

9.6%

Leasing Volume

+36% vs 2024

CMBS & Financial Distress

Office CMBS delinquency hit 12.34% in January 2026 — a historic high — with $957B in loans maturing in 2025

⚠️ CMBS Office Delinquency at Historic High

12.16% — September 2026 (up from 1.6% pre-COVID)

Overall CRE CMBS delinquency: 8.02%, up from 7.30% end of 2025

CMBS Delinquency Trend

Office sector — spiraling since 2022

CRE Loan Maturities

$2.5 trillion maturing 2025–2027

Bank CRE Lending

-58%

vs Pre-Pandemic

Office: -65%

National Office Vacancy

19.8%

Q3 2026 · C&W

Suburban exceeding metro

Loans Maturing (2025)

$957B

Refinancing

At higher rates

Major Boston Property Sales

Distressed sales revealing the true extent of value destruction

Sale Discounts from Prior Value

Major Boston office transactions, 2024–2025

Boston vs. National Sale Trends

Average office sale price per sq ft

Property	Sale Price	Prior Value	Discount
One Lincoln Street	$440M	$640M	-31%
100 Federal Street	$230M	$415M	-45%
One Post Office Square	$200M	$395M	-49%
One Boston Place	$112M	$293M	-62%

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One Boston Place lost 62% of its value — selling for $112M after being valued at $293M. These aren't outliers. The national average decline for office properties is approximately 37% from peak values.

Property Tax Revenue Impact

11-year Boston assessment data reveals the commercial-to-residential tax shift is underway

⚠️ First Commercial Decline in a Decade

FY2026: Commercial assessments fell $0.8B (−0.6%) while residential rose $2.5B (+3.1%)

Boston Assessing Dept · Commercial share of tax base dropped from 63.6% peak to 62.4%

Taxable Assessed Values — 8 Year Trend

Commercial peaked FY2025, now declining. Residential keeps climbing.

Commercial Share of Tax Base

Dropping from 63.6% peak — shifting burden to homeowners

Year	Commercial $B	Residential $B	Comm. Share	Comm. YoY
FY2019	$107.2B	$67.3B	61.4%	—
FY2020	$107.9B	$61.0B	63.9%	+0.7%
FY2021	$115.7B	$67.3B	63.2%	+7.2%
FY2022	$120.0B	$70.1B	63.1%	+3.7%
FY2023	$128.9B	$75.1B	63.2%	+7.4%
FY2024	$134.6B	$77.1B	63.6% ← peak	+4.4%
FY2025	$137.1B	$79.6B	63.3%	+1.9%
FY2026	$136.3B	$82.1B	62.4%	−0.6%

Overassessment Claims

$545M

Properties

39 buildings

Allegation

Retaliatory overvaluation

Tax Shift Risk

→ Residential

1.2pp drop

Homeowners pay more

Recovery Timeline

10+ years

At current pace

To pre-pandemic values

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The tax shift explained: Boston gets ~73% of revenue from property taxes. When commercial values drop, the city must either cut services or shift the burden to residential taxpayers. The 1.2 percentage point decline in commercial share from FY2024 to FY2026 represents billions in shifted tax base. Source: Boston Assessing Dept FY2016-FY2026 full property assessment data.

Boston Commercial — MLS PIN Market Review

YTD Oct 14, 2026 — listings, pending sales, and closed transactions

Closed Sales YTD

vs. 24 in 2025

Avg Sale Price

$1,833K

2022: $2,991K

Active Listings

101

2022: 57

Months Supply

41.8

Heavily oversupplied

12-Mo Sold

39 in 2022

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Heavy oversupply signal. 101 active listings against 29 closed sales (trailing 12mo) — a 42-month supply. Balanced markets run 6-9 months. Average DOM has risen from 86 days in 2022 to 120 in 2026.

Avg Sale Price (2022–2026)

Small sample — heavily mix-weighted

Closed Sales — YTD Oct 14

Year-to-date closed commercial transactions

Active Listings

Point-in-time commercial inventory

Avg Days on Market

Sold transactions YTD

Metric	2022	2023	2024	2025	2026
Closed Sales	31	29	31	24	18
Avg Sale Price	$2,991K	$1,605K	$1,326K	$1,670K	$1,833K
Avg DOM	86	89	92	113	120
Avg Days to Offer	77	84	84	108	115
Sale:List Ratio	91.1%	86.7%	91.3%	90.6%	90.6%
Active Listings	57	68	85	95	101
Inv. Avg DOM	159	129	160	175	188
Months Supply	17.5	21.5	27.6	38.0	41.8
12-Mo Listed	129	151	167	179	187
12-Mo Sold	39	38	37	30	29
12-Mo Pending	—	—	—	—	—

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Source: MLS Property Information Network, Boston, commercial sale listings and sales (leases excluded), as of Oct 14, 2026. Prior-year active-listing figures are reconstructed from listing dates; 12-month pending is not available from this pull.

Boston Commercial Real Estate