October 2025 Boston Office Report

Boston's metropolitan office market finds itself in a series of contradictions.

Office fundamentals remain constrained, yet green shoots continue to emerge. Vacancy expanded metro-wide to 20.4% as of the issuance of this report.

Vacancies were significantly impacted by the delivery of 10 World Trade Center Avenue this quarter – impacting both office and life science fundamentals as it has been added to market inventory with no executed leases to date. Office fundamentals were further affected by the delivery of South Station Tower in late September. Hines’ luxury office and residential asset, which has had more success in attracting tenants recently, has arrived with more than 500,000 SF of vacant space.

The market saw several significant blocks of space come online this quarter. After the announcement of Forrester’s renewal and contraction at 60 Acorn Park Drive in Cambridge earlier this year, 80,000 SF of office space was listed as available for lease at the building. In Waltham, Education Development Center opted to list more than 40,000 SF of their footprint at 300 Fifth Avenue for sublease. In Boston, the market saw more than 150,000 SF come online at 1325 Boylston Street in Fenway -  formerly the healthcare provider Optum’s corporate campus. Space additions can come with variable consequences. For instance, it was announced earlier this year that State Street intends to vacate its BTS office at One Channel Center, despite having a lease expiration date of December 2029. Consequently, Morningstar reported that the CMBS loan on this asset was transferred to special servicing in August.

The more promising narrative comes in the form of significant leasing activity in predominately Class A buildings. Hasbro took center stage in September, announcing they will be effectuating a corporate relocation to the Seaport – subleasing 256,000 SF from Foundation Medicine at 400 Summer Street. In the Financial District, DataDog renewed and expanded to 125,000 SF at 225 Franklin Street. Perhaps even more compelling – Schneider Electric executed a new lease at 115 Federal Street (Winthrop Center). They signed for 74,635 SF – relocating and expanding from 1 Boston Place. With this new signing, the trophy asset is just shy of 80% leased. On the topic of trophy assets, South Station Tower executed yet another deal – Ken Griffin’s market making firm, Citadel Securities, leased 11,000 SF on the 34th floor.  In Watertown, Atrius Health executed a long-term renewal at 485 Arsenal Street for 52,847 SF – a deal in which they were represented by Hunneman.

In Cambridge, leasing velocity remains impaired with the exception of one notable building. The Davis Companies’ property at 201 Broadway has executed three separate leases in Q3 for a total of 17,500 SF. This brings the total amount of executed leases at this asset to 7 this year – a promising sign for Class B office in what is otherwise a relatively beleaguered market. This property, represented by Hunneman, has executed the most leases of any individual property in Cambridge this year.

Sales activity has picked up for office assets, especially those with potential for reuse or repositioning. 95 Berkeley Street on the Back Bay / South End line transacted for $24M / $258/SF to an entity linked to Aden Capital and Fortuna Realty Group. The controlling entity had filed for a residential conversion with the city in July. 75 Sam Fonzo Drive in Beverly traded for $6,000,000 / $37/SF with an interesting narrative. Electric Insurance Company, the owner and tenant, sold the building to Connolly Brothers, Inc. – a construction management firm in late August. Connolly has history with the property: they initially constructed the four story, 160,000 SF office asset as a BTS for Electric Insurance Company back in 2001, and now are exploring a potential repositioning. 688 Great Road in Stow transacted to Masters Academy International for $9,820,627, or $31/SF. This 318,000 SF office asset was formerly the master campus of Bose for nearly thirty years. Masters Academy intends to redevelop the site into a private boarding academy with a focus on elite athletics.

The Federal Reserve announced a 25 basis point (bps) cut at their September 17th meeting and tentatively forecasted a further 50 bps by the end of 2025. Hunneman Research is closely monitoring bond yields for downward pressure that will reduce the cost of capital for future acquisitions.

For more information please contact:

Mark Fallon, Director of Research & Strategy | mfallon@hunnemanre.com