Office Vacancy Tightens in Metro Boston As Demand Outpaces New Supply

Office demand is outstripping supply in the Boston metro area, with vacancy expected to decline 10 basis points year-over-year to 19.1% in the fourth quarter, according to a recently released report by Marcus & Millichap. The market saw its first annual vacancy dip since 2022 earlier this year as select Class A offices and larger districts posted meaningful occupancy gains. The vacancy decline was driven primarily by Suffolk County, which saw more than 1.3 million square feet of net absorption in the first half of the year, driving vacancy down from 21.6% in June 2025 to 20.4% a year later. Marcus & Millichap found that vacancy also decreased in eight other submarkets and remained low in areas like Worcester, while in Cambridge vacancy climbed 250 basis points to 22.8%.

Around 3.3 million square feet of office space is projected to deliver in 2026, consisting mostly of a handful of projects larger than 300,000 square feet, the report notes. The average asking rent across the Boston area is expected to reach $38.75 by year-end, increasing 1.2% year-over-year. Cambridge is the metro’s priciest market at about $72.54 per square foot. In the investment market, average pricing fell significantly from more than $370 per square foot in 2022 to about $283 per square foot by mid-2026, while average cap rates grew from 6.7% to 7.7%.

Boston is expected to see 25,000 jobs created in 2026, supported in large part by education and health services. Traditional office-using sectors including finance and professional and business services remain below their 2022 employment peaks, while ongoing uncertainty around research funding and weakness in some aspects of the life sciences sector may reduce office demand, the report notes.