Key Takeaways
- Metrowide office vacancies increased for the third consecutive quarter, to 17.2%.
- Two million square feet of sublease space came to market in 2022.
- Top-end buildings and new construction are benefitting from a continued flight to quality.
- Availabilities in the city of Boston have reached an all-time high.
Whether due to reduced space needs stemming from weakened macroeconomic conditions (e.g. increased borrowing costs, lower company valuations) or from fewer workers in the office, in 2022 many firms offered sublease space or downsized footprints in new leases. These actions contributed to a Boston metro office vacancy rate above 17% — a cyclical high that is four percentage points worse than its pre-COVID benchmark. Across the metro more than 32 million square feet was available at the end of 2022.
There are also positives in the Boston metro market. Some companies are actively hiring and expanding footprints, particularly in ground-up construction and other high-quality assets. Job growth remained positive in 2022 in a variety of office-using sectors, and venture capital flows are healthy and plentiful. In fact, the $14.5 billion in (non-biotech) venture capital/pre-IPO funding for Massachusetts companies in 2022 was the second-highest on record.
