BOSTON – According to CBRE’s year-end report for 2024, strong renewal activity played a crucial role in stabilizing the Greater Boston market, with notable trends in office, life sciences, and industrial sectors.
Downtown Boston Office Market
The downtown office market experienced a significant 1.9 million square feet of leasing activity during the fourth quarter of 2024, driven primarily by large renewals. Prominent companies reaffirmed their commitment to the area, bolstering confidence in the market. After a two-and-a-half-year period of negative absorption post-2021, the market saw its second consecutive quarter of positive absorption. The sublease market and asking rents also stabilized, signaling cautious optimism. The gap between demand for Class A and Class B/C office space grew, highlighting the ongoing demand for centrally located, high-quality office environments.
Cambridge Office Market
Cambridge’s office market recorded 171,000 square feet of negative absorption in 2024, a marked improvement compared to the previous year’s contraction of 821,000 square feet. However, the fourth quarter ended with 96,400 square feet of negative absorption, with East Cambridge contributing significantly to this decline. The sublease market in Cambridge remains challenging, with nearly 1.1 million square feet available for sublease. Despite a slight decrease in sublease availability from the end of 2023, the market continues to contend with substantial supply.
Suburban Office Market
The suburban office market saw a decline of about 292,000 square feet in leasing activity quarter-over-quarter in Q4 2024, totaling 1,017,966 square feet leased. The volume of new subleases also dropped sharply from 259,844 square feet in the previous quarter to 84,098 square feet in Q4. Notably, over 25% of the leasing activity in the fourth quarter consisted of renewals, totaling 263,131 square feet.
Greater Boston Life Science Market
The Greater Boston life science market faced challenges in 2024 due to an oversupply of laboratory space, following a surge in construction that outpaced demand. In 2024, 7.6 million square feet of new ground-up development and conversions were delivered, including 2.2 million square feet completed in Q4. However, the market experienced 125,600 square feet of negative absorption in Q4, bringing the year-to-date total to 405,900 square feet of contraction. Despite these challenges, demand for lab space showed signs of stabilization, with a 15.9% increase in demand compared to the end of 2023.
Greater Boston Industrial Market
The Greater Boston industrial market remained stable in 2024, though it faced challenges due to heightened renewal activity and more cautious tenant behavior. New speculative developments were delivered without secured tenants, contributing to a slight increase in overall availability and vacancy rates. Overall leasing activity remained high, surpassing pre-pandemic records with 9.95 million square feet of transactions recorded in 2024. Despite fewer new deals and space givebacks, net absorption for the quarter was neutral at -96,984 square feet. The market is adjusting to the “new normal,” with supply and demand levels stabilizing.
Conclusion
Overall, Greater Boston’s real estate market showed resilience in 2024, with strong renewal activity across multiple sectors helping to stabilize the market. While challenges persist, particularly in the office and life sciences markets, cautious optimism prevails as the region adjusts to post-pandemic dynamics.
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