Boston’s Office Pipeline Tops the Charts

Boston’s under-construction pipeline remained in the spotlight through the second half of the year. With nearly 4.7 million square feet under underway as of October, the metro ranked first nationally for new projects, Yardi Matrix information shows.

The market’s vacancy rate continued to decline, remaining below the national average. However, office visits in the metro lagged behind the U.S. figure, according to a Placer.ai report. As of September, visits were down 35.6 percent compared to the same month in 2019, while nationwide office traffic was 26.3 percent below pre-pandemic levels.

Additionally, the Boston Zoning Commission approved the first major update to the city’s downtown zoning in more than 30 years last month. The initiative will introduce new protections for historic and cultural sites while easing the conversion of aging office buildings into residential use.

Largest office development pipeline nationwide

Boston’s office pipeline for under-construction space reached almost 4.7 million square feet, ranking first nationally, Yardi Matrix data shows. The metro was followed by Manhattan (3 million square feet) and Dallas (2.6 million square feet).

These are the only markets across the U.S. to surpass the 2 million-square-foot threshold. San Francisco (530,000 square feet) and Chicago (590,000 square feet) had the least underway space among gateway markets.

In June, Related Beal topped out Leiden Center II at Innovation Square in Boston. The 345,000-square-foot life science project is fully preleased by Vertex Pharmaceuticals and will come online in early 2027.

Boston’s office market saw 2.6 million square feet of space come online year-to-date through October. Eight properties were completed during this period, accounting for 0.9 percent of its total inventory, almost double the national figure.

Earlier this year, Lendlease completed FORUM, a 350,000-square-foot life science building within the Allston-Brighton neighborhood. The nine-story building is LEED Platinum certified.

Sales remain steady, assets trade below national prices

Boston’s office investment volume almost reached $1.2 billion in the first 10 months of the year, ranking ninth nationally but second in the Northeast. Manhattan ($6.4 billion) and the Bay Area ($4.4 billion) continued to top the charts, while Seattle ($576 million) and Miami ($654 million) were at the opposite pole.

Assets in the metro traded for $158 per square foot on average, slightly below the $191 national figure. Manhattan assets ($523 per square foot) remained the priciest, followed by the Bay Area ($386 per square foot), aligning with the total sales volume ranking. Chicago ($64) remained the cheapest gateway market.

One of the assets that traded during this period is the four-story, 160,000-square-foot 75 Sam Fonzo Drive workspace building. Connolly Brothers acquired the property in Beverly, Mass., fully vacant and plans to reposition it. RiverStone sold it.

In July, a joint venture between Live Oak Real Estate Investments and Tritower Financial Group purchased One Bowdoin Square, a 141,831-square-foot building within Boston’s downtown, for $28 million. The 1972-completed asset traded for $197.4 per square foot, commanding a slightly higher price than the metro’s average.

Less office space available in Boston

Boston’s office vacancy rate was one of the lowest among gateway markets, dropping to 15.6 percent in October. Year-over-year, the metro’s figure fell 120 basis points and was considerably below the 18.6 percent national index.

Earlier this fall, Hasbro decided to move its headquarters to Boston from Rhode Island, where it was founded. The firm will occupy 265,000 square feet at 400 Summer St., WS Development’s recently completed building. Relocation is expected by the end of next year.

Other significant leases in the area include KKR’s agreement to occupy 132,529 square feet at PGIM’s Two International Place. The firm signed a 15-year lease at the 35-story building.

Additionally, Boston office space had the second-highest listing rate regionally, clocking in at $48.7. The market registered a 2.8 percent year-over-year growth and surpassed the national figure by almost $16.

Coworking sector continues to grow

As of the end of October, Boston’s coworking inventory totaled roughly 9.9 million square feet across 259 locations, according to CoworkingCafe, continuing to expand in line with national coworking trends. Shared space made up 2.1 percent of the metro’s total office stock, matching the U.S. average. Nationally, Manhattan led with 12.2 million square feet, followed by Chicago (8.9 million) and Los Angeles (7.3 million). Miami ranked first for coworking share, with 4.3 percent of its total workspace footprint.

As of October, Regus held the largest coworking footprint in the metro, totaling 771,989 square feet across 40 locations. WeWork followed with 448,716 square feet, while Industrious ranked third with 251,809 square feet.