Office Investment in Boston
Boston's office market is having an identity crisis. Remote work gutted demand for commodity space while Class A life science buildings in Kendall Square trade at 4.5% caps. The spread between trophy assets and everything else has never been wider. Your OM better address the hybrid work elephant in the room or you'll lose credibility with day one. Buyers want proof your tenants are actually coming back to the office.
Market Context
Cap Rate Range
5.5% to 8.5% depending on class and location, with suburban B/C space pushing 9%
Current Vacancy
18.2% overall, but that's misleading—Class A downtown runs 12% while suburban is 24%
Rent Trend
Down 8% YoY for commodity space, flat to up 3% for trophy buildings with strong tenant rosters
Absorption
Negative 1.2M SF annually as companies consolidate footprints and shed sublease space
Price Per Unit Trend
Price per SF down 15% from 2022 peaks except for lab-convertible buildings
Transaction Volume
Down 40% from pre-pandemic levels as bid-ask spreads remain wide
Submarket Analysis
Back Bay/Financial District
5.5% to 6.5% capVacancy
12.3%
Avg Rent (1BR)
$68/SF NNN for Class A
Stable for trophy assets with strong transit access
OM Tip
Highlight walkability scores and proximity to South Station/Back Bay T stops
Kendall Square/East Cambridge
4.5% to 5.5% capVacancy
6.8%
Avg Rent (1BR)
$85/SF NNN
Red hot for lab space, selective for traditional office
OM Tip
Document lab conversion potential and life science tenant pipeline
Seaport District
5.8% to 6.8% capVacancy
15.1%
Avg Rent (1BR)
$72/SF NNN
Mixed—new construction struggling but established buildings holding
OM Tip
Show resilience during construction disruption and Silver Line expansion benefits
Route 128 Corridor
7.0% to 8.5% capVacancy
23.7%
Avg Rent (1BR)
$32/SF NNN
Value play territory but needs repositioning story
OM Tip
Focus on parking ratios and potential for mixed-use redevelopment
Cambridge Porter Square/Alewife
6.5% to 7.5% capVacancy
19.4%
Avg Rent (1BR)
$48/SF NNN
Benefiting from Kendall Square spillover but still challenged
OM Tip
Emphasize Red Line access and lower basis for tenant improvements
Performance by Vintage
0
P
1
r
2
e
3
-
4
1
5
9
6
8
7
0
8
s
9
10
b
11
u
12
i
13
l
14
d
15
i
16
n
17
g
18
s
19
20
a
21
r
22
e
23
24
l
25
a
26
r
27
g
28
e
29
l
30
y
31
32
o
33
b
34
s
35
o
36
l
37
e
38
t
39
e
40
41
w
42
i
43
t
44
h
45
o
46
u
47
t
48
49
m
50
a
51
j
52
o
53
r
54
55
c
56
a
57
p
58
i
59
t
60
a
61
l
62
63
i
64
n
65
v
66
e
67
s
68
t
69
m
70
e
71
n
72
t
73
—
74
f
75
l
76
o
77
o
78
r
79
80
p
81
l
82
a
83
t
84
e
85
s
86
87
t
88
o
89
o
90
91
s
92
m
93
a
94
l
95
l
96
,
97
98
m
99
e
100
c
101
h
102
a
103
n
104
i
105
c
106
a
107
l
108
s
109
110
s
111
h
112
o
113
t
114
,
115
116
a
117
n
118
d
119
120
a
121
s
122
b
123
e
124
s
125
t
126
o
127
s
128
129
i
130
s
131
s
132
u
133
e
134
s
135
.
136
137
1
138
9
139
8
140
0
141
s
142
-
143
1
144
9
145
9
146
0
147
s
148
149
s
150
t
151
o
152
c
153
k
154
155
n
156
e
157
e
158
d
159
s
160
161
s
162
i
163
g
164
n
165
i
166
f
167
i
168
c
169
a
170
n
171
t
172
173
T
174
I
175
176
a
177
l
178
l
179
o
180
w
181
a
182
n
183
c
184
e
185
s
186
187
b
188
u
189
t
190
191
h
192
a
193
s
194
195
g
196
o
197
o
198
d
199
200
b
201
o
202
n
203
e
204
s
205
206
i
207
f
208
209
y
210
o
211
u
212
213
c
214
a
215
n
216
217
l
218
a
219
n
220
d
221
222
c
223
r
224
e
225
d
226
i
227
t
228
229
t
230
e
231
n
232
a
233
n
234
t
235
s
236
.
237
238
2
239
0
240
0
241
0
242
s
243
-
244
2
245
0
246
1
247
0
248
s
249
250
r
251
e
252
p
253
r
254
e
255
s
256
e
257
n
258
t
259
s
260
261
t
262
h
263
e
264
265
s
266
w
267
e
268
e
269
t
270
271
s
272
p
273
o
274
t
275
276
w
277
i
278
t
279
h
280
281
e
282
f
283
f
284
i
285
c
286
i
287
e
288
n
289
t
290
291
f
292
l
293
o
294
o
295
r
296
297
p
298
l
299
a
300
t
301
e
302
s
303
304
a
305
n
306
d
307
308
d
309
e
310
c
311
e
312
n
313
t
314
315
m
316
e
317
c
318
h
319
a
320
n
321
i
322
c
323
a
324
l
325
s
326
.
327
328
P
329
o
330
s
331
t
332
-
333
2
334
0
335
1
336
5
337
338
c
339
o
340
n
341
s
342
t
343
r
344
u
345
c
346
t
347
i
348
o
349
n
350
351
c
352
o
353
m
354
m
355
a
356
n
357
d
358
s
359
360
p
361
r
362
e
363
m
364
i
365
u
366
m
367
s
368
369
b
370
u
371
t
372
373
w
374
a
375
t
376
c
377
h
378
379
o
380
u
381
t
382
383
f
384
o
385
r
386
387
o
388
v
389
e
390
r
391
s
392
u
393
p
394
p
395
l
396
y
397
398
i
399
n
400
401
c
402
e
403
r
404
t
405
a
406
i
407
n
408
409
s
410
u
411
b
412
m
413
a
414
r
415
k
416
e
417
t
418
s
419
.
What Your OM Needs to Address
Return-to-Office Documentation
Buyers want proof tenants are actually using the space they're paying for
Data to Include
Badge swipe data, parking utilization, actual vs. contracted headcount per tenant
Sublease Competition Analysis
There's 3.2M SF of sublease space competing directly with your building
Data to Include
Sublease inventory within 0.5 miles, pricing comparison, and lease expiration timing
Lab Conversion Potential
Even marginal conversion potential adds 20% to basis in this market
Data to Include
Floor-to-floor heights, HVAC capacity, electrical infrastructure, and zoning constraints
Transit Accessibility Metrics
Walk time to T stops directly correlates with occupancy rates
Data to Include
Walking distance to nearest stations, frequency of service, and planned MBTA improvements
Historical Preservation Constraints
25% of downtown buildings have some form of historic designation
Data to Include
Landmark status, allowable modifications, and impact on redevelopment potential
Realistic TI Allowance Modeling
Market TI allowances are 40% higher than pre-pandemic to compete
Data to Include
Current market TI rates by tenant size, timing of major building upgrades needed
Investment Outlook
Short Term
Continued bifurcation between haves and have-nots. Trophy assets in prime locations will see modest rent growth while commodity space faces ongoing pressure. Distressed opportunities emerging as overleveraged owners hit refinancing walls.
Medium Term
Stabilization expected by 2028 as companies finalize hybrid work policies and right-size their footprints. Conversion and redevelopment activity will accelerate, especially for buildings with lab potential or residential zoning flexibility.
Long Term
Boston's knowledge economy fundamentals remain strong, but the office market will be permanently smaller. Winners will be buildings that can adapt to changing tenant needs with flexible floor plates, strong amenities, and excellent transit access.
Buyer Profile
Value-add funds targeting 15% IRRs on distressed suburban assets, and core-plus investors paying premium pricing for stabilized downtown properties with strong in-place cash flow and credit tenant rosters.
Marketing a office property in Boston?
DealDraft generates professional offering memorandums with market-specific data and property-type expertise built in.
Create Your OM