Boston’s Office Market Faces 25-Year High Vacancy Rate

Boston, September 27, 2025

News Summary

During a recent panel discussion, Bob Rivers, chair of Eastern Bank, raised urgent concerns regarding Boston’s post-pandemic office market, which has seen a vacancy rate of 14%, the highest in 25 years. This alarming trend could have significant ripple effects on the local economy, affecting small businesses, property values, and homeowners facing rising taxes. Panelists discussed the necessity for large-scale transformation and proposed innovative approaches, including affordable housing initiatives and potential demolitions of unsuitable office spaces to enhance downtown’s vibrancy.

Boston

Bob Rivers, chair of Eastern Bank, expressed concerns about Boston’s post-pandemic future during a panel discussion organized by the State House News Service. The panel highlighted an urgent need for large-scale change as Boston’s office market reached a vacancy rate of 14% in the first quarter of 2025, a 25-year high and a marked rise from a decade of rates below 10%. Panelists warned that sustained high office vacancy could ripple through the local economy, affecting lenders, property owners, small businesses dependent on foot traffic, and homeowners who may face rising taxes to offset declining commercial real estate values.

Key Details and Immediate Concerns

Despite some signs of recovery, including increased downtown foot traffic and some stabilization in vacancy figures, panelists emphasized that these gains do not erase deeper structural problems. High office tower vacancy rates were cited as a central financial and vibrancy challenge for downtown Boston. Rivers emphasized a need for transformation rather than incremental changes and advocated for building more housing to address the challenges faced in the downtown area.

The discussion reviewed policies and market barriers. The Healey and Wu administrations have provided subsidies for office-residential conversions, but Rivers believes they are insufficient. Many multifamily developer clients of Eastern Bank are struggling to make projects financially viable due to barriers like Boston’s affordable housing requirements. Rivers suggested that some office buildings are unsuitable for conversion and should be demolished to make way for new multifamily housing. He highlighted the urgency of the situation, cautioning that the city was approaching a crisis.

Economic Ripple Effects

Panelists outlined direct and indirect consequences of prolonged office vacancy. The ripple effects of high office vacancies could negatively impact lenders, property owners, small businesses dependent on foot traffic, and homeowners facing rising taxes to offset declining commercial real estate values. Lenders could see increased default risk on commercial loans, property owners could face devalued assets, and local retail and service businesses could lose customers who previously commuted downtown.

Policy Responses and Development Challenges

Current subsidy programs for office-to-residential conversions were noted as helpful but limited in scope. Rivers and others argued that subsidies alone will not be enough to overcome financing challenges and regulatory hurdles. Multifamily developers are encountering difficulties meeting affordability mandates while keeping projects financially viable. For some properties, conversion is not feasible; in those cases, panelists urged consideration of demolition and rebuilding as an alternative pathway to increase housing supply downtown.

Proposals and Alternatives Discussed

Panelists presented a range of ideas to accelerate downtown housing and restore vibrancy. Panelist Meg Mainzer-Cohen proposed a moonshot idea of constructing a large deck over the Massachusetts Turnpike for new housing, which would likely need significant government funding. Tito Jackson, a panelist and owner of downtown cannabis business Apex Noire, suggested using prefabricated housing as a faster and more affordable housing option. Jackson also recommended leveraging culture and the arts to enhance downtown vibrancy, recalling how performers attracted foot traffic at Faneuil Hall.

The panel discussion was moderated by Globe reporter Jon Chesto and included Evan Horowitz from Tufts University. Participants urged that planning and funding decisions should proceed quickly to prevent further decline in downtown economic health.

What the Numbers Say

Boston’s office market reached a vacancy rate of 14% in the first quarter of 2025, marking a 25-year high and a drastic increase from a decade of rates below 10%. That shift underscores the scale of the challenge local leaders and developers face in repurposing or replacing underused office space.

Background and Context

Before the pandemic, Boston’s office vacancy rates were generally below 10% for about a decade. The pandemic altered demand for office space, accelerating remote and hybrid work trends that reduced daily downtown foot traffic. Policymakers have begun to respond with targeted subsidies for office-to-residential conversions and other incentives, but panelists at the discussion argued that more aggressive, large-scale action will be necessary to restore downtown’s economic base and housing supply.

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Additional Resources

• Commercial Cafe: National Office Report
• GlobeSt: Boston Office Demand Returns to Pre-Pandemic Levels
• CoStar: Boston Office Vacancy Hits 25-Year High
• Boston Globe: Boston Office Vacancy Conversion Housing
• NBC Boston: Boston Office Market Starts 2025 with Record High Vacancy Rate
• Wikipedia: Boston
• Google Search: Boston office market 2025
• Google Scholar: Boston office vacancy
• Encyclopedia Britannica: Boston real estate
• Google News: Boston office vacancy

Author: STAFF HERE BOSTON WRITER

BOSTON STAFF WRITER The BOSTON STAFF WRITER represents the experienced team at HEREBoston.com, your go-to source for actionable local news and information in Boston, Suffolk County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Boston Marathon, Head of the Charles Regatta, and Boston Harborfest. Our coverage extends to key organizations like the Greater Boston Chamber of Commerce and Associated Industries of Massachusetts, plus leading businesses in finance, biotech, and insurance that power the local economy such as Fidelity Investments, Biogen, and Liberty Mutual Insurance. As part of the broader HERE network, we provide comprehensive, credible insights into Massachusetts's dynamic landscape.