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

Only 750K SF under construction — all build-to-suit. No speculative office projects.

Supply constraint should help vacancy stabilize over 2026-2027

Office Vacancy Trajectory

Boston overall vacancy, 2019–Q1 2026 (C&W)

Vacancy by Source — Q1 2026

Different brokerages, different methodologies — same trend

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Q1 2026 setback: After two quarters of stabilization in H2 2025, vacancy rose 30 bps QoQ. Downtown at 19.9%, suburbs at 20.5% — now exceeding the metro average. 1.6M SF of new leasing activity, with 1.0M+ SF in downtown. Class B inventory continues to struggle.

Vacancy Deep Dive

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

Class A Vacancy

~16%

Pre-COVID

Trend

Declining

Class B Vacancy

~22%

Pre-COVID

8.3%

Rents

Off 15%+

Suburban Clusters

20.5%

Q1 2026

Exceeds metro avg

Class A vs. Class B Vacancy

The flight-to-quality gap is widening

National Comparison

Boston vs. national and peer cities

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Construction pipeline at 20-year low: Only 750K SF under construction in Greater Boston, all build-to-suit. 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 rose 20 bps to 19.9% in Q1 2026 after declining from 28.5% peak to 25.2%

C&W Q1 2026 · 1.0M+ SF of new downtown leasing activity partially offset by new availability

Downtown Peak Vacancy

28.5%

Mid-2024

Pandemic peak

Year-End 2025

25.2%

Improvement

-3.3 pp from peak

Q1 2026

19.9%

Downtown

+20 bps QoQ

Downtown Vacancy — Recovery + Setback

From 28.5% peak, recovered to 25.2%, Q1 uptick

Key Recovery Metrics

Downtown Boston revitalization indicators

Retail Vacancy

Down 50%

From Peak

Street-level filling up

Q1 New Leasing

1.6M SF

Downtown

1.0M+ SF

Industrial Vacancy

9.6%

Leasing Volume

+36% vs 2024

CMBS & Financial Distress

Office CMBS delinquency hit 11% — a historic high — with $950B in loans maturing in 2025

⚠️ CMBS Office Delinquency at Historic High

11.01% — end of 2024 (up from 1.6% pre-COVID)

Overall CRE CMBS delinquency: 6.57%, up from 4.51% end of 2023

CMBS Delinquency Trend

Office sector — spiraling since 2022

CRE Loan Maturities

$2.3 trillion maturing through 2028

Bank CRE Lending

-58%

vs Pre-Pandemic

Office: -65%

National Office Vacancy

20.1%

Q2 2026 · C&W

Suburban exceeding metro

Loans Maturing (2025)

$950B

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 May 3, 2026 — listings, pending sales, and closed transactions

Closed Sales YTD

vs. 16 in 2025

Avg Sale Price

$2,292K

2022: $726K

Active Listings

214

2022: 175

Months Supply

67.6

Heavily oversupplied

12-Mo Sold

42 in 2022

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Heavy oversupply signal. 214 active listings against 38 closed sales (trailing 12mo) — a 68-month supply. Balanced markets run 6-9 months. Average DOM has risen from 80 days in 2022 to 110 in 2026.

Avg Sale Price (2022–2026)

Small sample — heavily mix-weighted

Closed Sales — YTD May 3

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	14	12	15	16	9
Avg Sale Price	$726K	$1,957K	$623K	$1,387K	$2,292K
Avg DOM	80	77	101	131	110
Avg Days to Offer	70	69	94	121	102
Sale:List Ratio	92.5%	99.2%	92.5%	—	93.2%
Active Listings	175	232	236	230	214
Inv. Avg DOM	167	117	214	147	156
Months Supply	50.0	71.4	60.3	58.7	67.6
12-Mo Listed	407	487	472	514	513
12-Mo Sold	42	39	47	47	38
12-Mo Pending	157	128	136	125	143

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Source: MLS Property Information Network Five-Year Sub-Report, Boston area, commercial-use property, as of May 3, 2026.

Boston Commercial Real Estate