Supply:
Overall vacancy increased a modest 20 basis points (bps) quarter-over-quarter (QOQ) to 19.0%, matching the prior quarter’s uptick. Downtown Boston and the Suburban market each recorded 20-bp increases, ending the quarter at 21.3% and 17.7%, respectively. Vacancy improved or remained unchanged in seven of the market’s 19 submarkets with the most significant improvements posted in Watertown and Urban North. These gains contributed to a 40-bp QOQ decline in Urban Ring vacancy to 14.1%, marking the cluster’s third consecutive quarterly improvement. The Urban Ring remained the market’s tightest cluster and the only one to post positive net absorption in Q3, with nearly 50,000 square feet (sf) of occupancy gains.
Demand:
Momentum continued on the demand side as 3.2 million square feet (msf) transacted across new leasing and renewals in Q3, outpacing the prior quarter’s total by more than 100,000 sf. The market recorded 15 transactions 50,000 sf or larger, up from 12 signed during Q2. The quarter’s two largest deals were renewals—Sanofi in East Cambridge and SharkNinja in 128 Central—and together accounted for nearly half of the market’s 1.5 msf of quarterly renewal volume. Meanwhile, new leasing totaled 1.7 msf, a 10.1% dip QOQ, though total deal count increased from 217 in Q2 to 239 in Q3.
New demand in Suburban submarkets outpaced Downtown, accounting for 55.3% of the Greater Boston’s total quarterly deal volume. The 495 Belt was home to the quarter’s largest new deal, Onto Innovation’s 160,000-sf lease in Andover, while Fenway/Longwood notched Downtown’s most sizeable transaction as the Boston Red Sox leased 100,500 sf, marking the largest new office deal signed in the submarket in more than five years. Six submarkets surpassed the 100,000-sf mark for quarterly leasing activity, up from just four during the second quarter.
Move-outs continued to outpace move-ins, with 13 submarkets recording overall net occupancy losses during Q3. However, the Seaport posted its third consecutive quarter of positive net absorption and led the market in year-to-date (YTD) occupancy gains at nearly 80,000 sf.
Pricing:
Direct average asking rents posted a modest $0.22-psf (per-square-foot) uptick QOQ to $48.19 psf, with asking rents for Class A and Class B space increasing in tandem. All five geographic market clusters recorded rent growth, led by Downtown where rents increased by $0.63 psf QOQ as high-rise space in quality product remained particularly competitive. Meanwhile, rent growth for sublease space surpassed direct, rising $0.84 psf QOQ as multiple large blocks of premium space entered the market.
Downtown Boston (CBD):
Overall vacancy increased 20 bps to 21.3%, driven by a 40-bp rise in Class A vacancy, while Class B remained unchanged. Midtown/N. Station and the Seaport posted positive overall net absorption during Q3, fueling respective quarterly vacancy declines of 40 bps and 20 bps. Despite accounting for the largest share of leasing among the market’s geographic clusters, Downtown Boston posted its lowest quarterly leasing total since Q1 2025 at 751,000 sf. The bulk of demand remained concentrated in Class A assets, which comprised nearly three-quarters of the cluster’s leasing total. Renewals were largely concentrated in the Financial District, accounting for 64.6% of activity. This was boosted by two significant renewals by law firms, reinforcing the sector’s commitment to the Central Business District. All five Downtown submarkets recorded direct average asking rent growth, yielding a $0.63-psf QOQ increase for the cluster.
Suburban Boston:
Performance varied across the suburban clusters in Q3, with the 495 Belt and Urban Ring recording quarterly vacancy improvements while all three clusters posted asking rent growth. Sublease availability declined nearly 250,000 sf year-over-year (YOY) to 3.4 msf, its lowest level since Q1 2023. Suburban Boston continued to post steady demand, accounting for six of Greater Boston’s 10 largest transactions signed during the third quarter.
Cambridge:
Overall vacancy increased just 20 bps since the start of the year to 20.5%. Quarterly direct net absorption was mild, with occupancy losses totaling -22,000. In an encouraging sign for a cluster where demand has been relatively subdued in recent years, Cambridge recorded its strongest quarterly leasing total since Q4 2023 at 99,300 sf. Blitzy, Walden Robotics, and Anthropic all transacted during the third quarter, reinforcing Cambridge’s appeal to AI occupiers. Direct asking rents increased $0.55 psf QOQ to $77.98 psf, maintaining a substantial premium over the Greater Boston average.
