After years in the doldrums, Boston’s office market just posted its strongest quarter since 2019, a sign the city’s leasing slump may finally be turning a corner.
Tenants signed nearly 1.9 million square feet of deals last quarter, Bisnow reported, citing new reports from CBRE and Hunneman, led by a wave of large commitments downtown.
Toy giant Hasbro topped the list, taking 265,000 square feet at WS Development’s 400 Summer Street in the Seaport after more than a century in Pawtucket, Rhode Island. KKR & Co. leased 132,000 square feet at International Place, Schneider Electric signed on for 74,000 square feet at Winthrop Center and ServiceNow took a 54,000-square-foot sublease at 100 Causeway Street.
In total, roughly 55 percent of leasing took place within the central business district, according to CBRE.
Renewals and expansions also gained traction, accounting for one-third of all leasing volume; that’s nearly double the previous quarter, per CBRE. BNY Mellon renewed 205,000 square feet at One Boston Place, while Datadog expanded to 125,000 square feet at 225 Franklin Street.
The uptick has yet to translate into lower vacancies. Greater Boston’s rate ticked up to 20.4 percent from 19.6 percent, Hunneman found, as tenants traded older addresses for newly delivered trophy buildings.
“There’s a little wind in the sails,” said Hunneman’s Mark Fallon. “The turnaround has to start somewhere.”
Sublease availability — one of the market’s softest spots since 2020 — has declined for eight consecutive quarters, falling to 3.8 percent, according to CBRE.
Deliveries added fresh supply to the mix. Hines’ South Station Tower secured an 11,000-square-foot lease from hedge fund Citadel, bringing occupancy above 100,000 square feet, while Boston Global Investors’ 10 World Trade contributed 257,000 square feet of availability to the market.
Still, churn continues as legacy tenants shed excess space. Forrester, Optum and the Education Development Center collectively listed more than 250,000 square feet for sublease last quarter. If JPMorgan Chase finalizes its rumored 250,000-square-foot consolidation at South Station Tower, even more backfill could follow.
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