The booming local economy has benefitted few submarkets like Downtown Boston. The city’s core has seen nearly a half million square feet of new commercial real estate assets come to market in 2018, with another 1.2 million still under construction. And with year-over-year employment up nearly five percent, the market looks promising for businesses seeking office space, landlords looking to lease, and businesses looking sublease their current office.
Downtown Boston Office Space | Lease Data & Trends
|Class A||$64||30 msf||8%|
|Class B||$55||20 msf||8.5%|
|Class C||$47||2.5 msf||7%|
Boston’s commercial real estate market has thrived on the back significant labor market growth. Limited supply continues to be a challenge, but developments in the Financial District, Seaport, and Cambridge will increase options for employers.
The average asking rent for Class A office space in Downtown Boston is approximately $64 per square foot. For businesses seeking more budget-friendly office options, Downtown Boston has more than 10 million square feet of Class B and Class C office space for rent. These spaces’ asking rents ranging between $45 and $55 per square foot.
In 2018, landlords across the city began to raise rents after several years of stagnation. Average asking rents in Boston’s Central Business District increased more than seven percent in 2018 and Class B office space in Back Bay and Seaport increased by more than 10 percent.
What Our Brokers Say about Downtown Boston Office Space for Rent
2018 has been marked by an active leasing and sublease market. The first quarter was Boston’s strongest in 12 years, with vacancy declining 60 basis points, rents remaining stable, and more than one million square feet of new construction scheduled to come to market.
96% of these soon-to-be constructed spaces are pre-leased, and prospective tenants are considering these spaces in a new way. This blank slate allows landlords to create the unique amenities that their tenants are looking for. Meanwhile, landlords of existing spaces must work with their current structures to include the bonuses that tenants have come to expect, like roof decks and huddle rooms.
With benefits like these in mind, large deals and big names continue to flock to the Downtown Boston area. WeWork is taking over the 100,000 square foot space previously occupied by Digitas at 33 Arch Street, and Salsify, an e-commerce software developer, stakes its claim on the area with a commitment to 55,000 square feet at 101 Federal Street.
In Cambridge, Philips’ lease at Cambridge Crossing is just one of the latest in suburban-to-urban migration reports. Suburban markets remain challenged by vacant zones, with buyers becoming more price-conscious while examining their options to get the most use out of a space and the area in which it is located. However, urban expansion in areas like Downtown Boston should push demand into the 128/Mass Pike submarket while increasing renewal activity in the suburban market thanks to lower costs and broader growth options.
With that in mind, Boston’s overall new commercial development is fair, and corporate footprints are shrinking, so the city don’t be experiencing the same overwhelming change that was seen in both 2000 and 2008.
Get to Know Downtown Boston
Downtown Boston is home to a bevy of historic hidden gems. Major landmark sites like the Granary Burying Ground, Old State House, and Old South Meeting House are celebrated in their own right, but it’s the lesser-known attractions that give the area its unique brand of charm.
Spring Lane, the secluded alley between Washington and Devonshire streets, is where Boston began. Literally. In 1630 at that exact spot, the Puritans established the tiny settlement of Boston, with the spring as their original source of freshwater.
Literature lovers are enthralled by the Old Corner Bookstore, originally the publishing house of Ticknor and Fields, who produced many classic American titles such as Harriet Beecher Stowe’s Uncle Tom’s Cabin, Louisa May Alcott’s Little Women, and Henry David Thoreau’s Walden.
And, of course, one can’t call themselves a true Bostonian until they’ve visited One Milk Street to view the bust commemorating the birthplace of Benjamin Franklin. And since Franklin himself was a fan of a beer or three, raise a glass to him at the United States’ oldest tavern, The Bell in Hand, located right by Faneuil Hall.