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Market Report

Boston Office Investment Forecast

2022 Outlook

Stock Expansion Outpacing Demand Growth;
Investment Sentiment Buoyed by Life Sciences Boom

Ample supply growth weighs on upward-trending office fundamentals. Boston's construction pipeline remains formidable for a second straight year. After 2021's delivery schedule surpassed previous highs, developers are projected to set a post-financial crisis record this year. With many tenants still subletting space as they grapple with recalling employees to the office, builders run the risk of diluting a recovering market with new supply. The metro boasts one of the nation's most prodigious office construction pipelines, with nearly 12 million square feet of space currently underway. This substantial amount of space will leave availability ending 2022 at an eight-year high. Though demand for space varies by industry, leasing activity is most robust in Boston's growing life sciences sector, leading builders to outbid developers of other property types for valuable real estate in the metro's urban core. However, new completions catering to other office-using segments may report elevated vacancy in the near term. Further recovery may be challenged as the spread of COVID-19 variants may convince some employers to delay returns to the office or extend hybrid work policies utilizing less floorspace.

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