Boston Office Vacancy Hits 17.6% as Foreclosures Mount

A gateway market moving against the national trend

Boston's office market got worse over the past year while the rest of the country slowly improved. CommercialCafe's October Office Report puts the city's vacancy rate at 17.6% in September, up 2.2 percentage points from a year earlier. Over the same period the national rate fell 0.8 points to 17.8%.21 Average asking rents in Boston slipped 1% to $47.65 per square foot, while the national average rose 1.2% to $33.18.21

The part that stands out is construction. Boston had nearly 2.98 million square feet of office space under construction in September, which ranks third nationally behind Manhattan and Dallas.21 Rising vacancy and a large pipeline in the same market sounds like a recipe for oversupply. The rest of the coverage points to a different story. Boston's problem is less about new buildings coming online and more about old debt being paid off with less money than it was supposed to bring in.

The pipeline is smaller, and more committed, than it looks

CommercialCafe's own numbers show the pipeline shrinking. The firm counted roughly 4.1 million square feet under construction in Boston in late 2025 and early 2026, when Boston led the nation.2730 By February the figure was about 3.9 million.26 By September it was just under 3 million.21 Earlier coverage noted the pipeline had already fallen to less than a quarter of its 2024 peak.30 A year before that, CommercialEdge reported the pipeline had dropped from 13.9 million to 6.3 million square feet.25

The brokerages measure the market differently, and several report a much smaller pipeline. CBRE said in its second-quarter downtown report that no new office projects were under construction, compared with more than 5 million square feet in early 2022, and that no major new developments are expected to deliver before 2032.29 JLL counted 894,395 square feet under development, all of it preleased, and concluded that near-term construction will not add competing vacancy.24 Colliers called the speculative office pipeline "empty."14

Most likely the gap comes from how each firm defines the market: geography, property type, and whether lab space counts. The direction is the same in every report, though. What is still being built in Boston is mostly committed space and the last pieces of an earlier cycle, like Commonwealth Pier in the Seaport, which delivered 635,000 square feet in the second quarter.29 The lab projects that remain tend to have tenants signed. Lincoln Property Company lists Takeda at 585 Third Street and AstraZeneca at 290 Binney Street in Cambridge.16 IQHQ has paused vertical construction on its nearly 960,000-square-foot Boston life sciences project until it secures 50% preleasing.30 My reading is that the "one of the nation's largest pipelines" label is technically accurate but overstates how much speculative risk is still coming.

Disagreement on vacancy

Vacancy figures vary just as much. CommercialCafe shows Boston getting worse. CBRE reported downtown vacancy falling to 18.7% in the second quarter from 19.1% a year earlier, with 803,879 square feet of positive net absorption and sublease availability down for the 11th straight quarter.29 JLL measured total vacancy at 23.6% and reported back-to-back quarters of positive absorption for the first time since 2019.24 Cushman & Wakefield put Greater Boston at 19.0%, up 30 basis points, and called it the smallest quarterly increase in more than a year.12 Colliers reported availability falling to 23.7%, its lowest level since 2024.14

The headline numbers range from about 17% to almost 24%, so no single figure tells the whole story. The trend is clearer: several brokerages see occupancy stabilizing in 2026 even as one national data provider shows vacancy rising year over year. Everyone agrees on the split between building classes. JLL found direct availability in top-tier buildings at just 8.6%, with average lease terms of 10.2 years.11 Earlier, JPMorgan Chase's 250,000-square-foot lease at South Station Tower took the last available new-construction high-rise space in the city.17 Yardi Research director Peter Kolaczynski said demand for best-in-class space is real but makes up only a small slice of the market, while much of the Class B stock faces serious obstacles.21

Commercial real estate loans are where the losses show up

The split between building classes becomes a financial problem when loans come due. The clearest current example is 100 Summer Street. Wells Fargo scheduled a foreclosure auction there for October 20.32 Rockpoint Group bought the 32-story tower in 2019 for $806 million, with a $470 million Wells Fargo mortgage.36 The city now assesses it at $425 million.37 The building is 72% leased, and the Massachusetts Trial Court signed a 10-year lease for about 79,000 square feet at $64.77 per square foot.38 Reports differ on its size, citing 1.1 million or 1.3 million square feet. Either way, observers expect it to be the largest Boston office foreclosure auction in more than a decade.3138

Previous auctions suggest how this tends to go. One Lincoln sold at foreclosure in March 2025 for $400 million, a little more than half of its $763 million 2022 mortgage, and the lender bought it back.31 At the Park Square Building in Back Bay, a special servicer tied to Starwood bid about $95 million against a $160 million loan.35 In Cambridge, Bank OZK said it had already lost $72.4 million on the 40 Thorndike office conversion.40

Nationally, the Mortgage Bankers Association expects $875 billion in commercial loans to mature in 2026, down from $957 billion in 2025. MSCI puts distressed commercial real estate at $130.3 billion, with office accounting for $62.9 billion.4 Borrowing costs are not helping. The 10-year Treasury yield was around 5.08% in mid-October, and a Wells Fargo Investment Institute strategist warned rates may not have peaked. One Boston lender's market page says 2026 deals are being sized by debt-service coverage rather than headline loan-to-value, and commodity office space is underwritten more conservatively.1

The consequences reach City Hall. Property taxes make up about three-quarters of Boston's $4.9 billion budget, and Mayor Michelle Wu took about $70 million from reserves to close the last fiscal year's gap.31 Foreclosures also feed the office-to-housing pipeline. The Park Square write-down came before Vanbarton Group's plan for up to 490 apartments.35 The city's own conversion program has finished just one building, 281 Franklin Street, with 15 units.28 I think the evidence supports the argument that loan write-downs, more than tax incentives, are what is actually moving empty offices toward housing.

Investment trusts: the high end recovers, the rest gets repriced

Publicly traded real estate investment trusts show the same split. BXP, Boston's largest office REIT, hit a 52-week low of $53.10 in May after a 48% drop over six months.2 By late July it had raised its 2026 funds-from-operations guidance to $6.99–$7.05 per share, above the analyst consensus, and reported second-quarter FFO of $1.78.6 The company signed about 1.8 million square feet of leases that quarter and raised portfolio occupancy by 100 basis points.5 It also closed a $1.2 billion Wells Fargo-led construction loan for 343 Madison Avenue in Manhattan8 and signed a 320,000-square-foot lease with Boston Dynamics in Waltham.9 Lenders and tenants are still backing premium assets. The same bank is foreclosing on a 1980-vintage downtown tower.

Lab-focused landlords are adjusting too. Savills reported that Alexandria Real Estate will market 401 Park Drive as office space instead of going ahead with a lab conversion, as Boston-Cambridge life sciences vacancy reached 26.8%.19 Investors are still buying. Boston office sales totaled about $1.47 billion through September at roughly $230 per square foot, the second-highest year-to-date volume in the Northeast.21 As CommercialCafe notes, sales volume by itself does not show whether values are recovering.21

Data centers will not absorb the empty space

In other markets, data center construction has given some landlords a use for surplus property. That is unlikely to happen in Boston. Governor Maura Healey's executive order requires local approval and a community benefits agreement before state permits are issued.49 City Councilor Miniard Culpepper has proposed banning new data centers in every zoning district. Existing facilities would be grandfathered, including Markley Group's 920,000-square-foot site at 1 Summer Street.41 The planning department said it would not support the ban as written, but one official said hyperscale facilities are probably a poor fit for urban sites anyway.44 No new data center has been proposed in the city.44 Across the state, MassLive counted more than 30 communities that have enacted or are discussing moratoriums or bans.50 Boston will have to fill its vacant offices with tenants, conversions, or lower prices, not servers.

The takeaway

I read the 17.6% figure as a symptom of what is happening, not a turning point. Construction is ending, and most of what remains is spoken for. Leasing in the top buildings is tightening. The real cost is showing up in the loans on older towers, where sale prices are resetting to half or less of their pre-pandemic values. The 100 Summer Street result and the pace of maturities in 2027 will show more about Boston's office recovery than the next vacancy report.