Leasing demand falls off from last quarter as Boston cools down from over a year of strong leasing activity

As inflation continues to soar higher and economic concerns loom, second-quarter leasing demand reversed course after a positive trajectory. In the previous five quarters, leasing activity came in near or slightly above pre-pandemic levels. This quarter, however, leasing activity fell 30.3% from last quarter and 26.5% from a year ago, now resembling all-time lows seen at the start of the pandemic. To put things into perspective, Boston saw a strong recovery in leasing activity throughout 2021 and into Q1 2022, followed by a drop off this quarter as a result of a lower number of deals transacted given the economic uncertainty and some tenants taking a “waitand- see” approach. However, flight to quality remains strong in Boston with top tenants in the market still looking to lease the best-in-class space, with all of the top 10 transactions this quarter being executed in Class A buildings. The two largest leases this quarter are both in future developments with InterSystems Corp. leasing 420,000 square feet (sf) at One Congress which is a 1.0-million-square-foot (msf) office building currently being constructed, and Bain & Company leasing 221,000 sf at 350 Boylston Street which is nearly the entire building.

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