The first tenants have been announced for the skyline-defining South Station Tower: law firm Jones Day and insurance company FM, which together will occupy more than 90,000 square feet. It’s a notable win for developer Hines—but Boston’s Class A market needs far more leasing activity to shift the tide. These two deals represent less than 10% of the new Class A inventory slated for delivery in 2025. Without additional preleasing—and aside from any backfill impact—new vacancies at South Station Tower and 10 World Trade could push Boston’s Class A direct vacancy rate up by more than a full percentage point. As of Q1 2025, the total availability rate stood at a near-record 21.9%, or 11.4 million square feet.

This cycle has been harder on office developers than most others. As shown in Exhibit 1, Colliers experts in Boston have compared the vacancy rate at completion for large Class A speculative buildings in Boston and Cambridge across several building cycles. For the four qualifying assets that came on line here in 2021–24, vacancy rates at completion averaged 40%, which, to date, makes this cycle the most challenging for landlords since the late 1980s/early 1990s. With a lot of uncommitted space still in the pipeline for 2025, the post-COVID period could end up the worst on record for new office construction. Fortunately, developments completing in 2025 still have time to find tenants prior to delivery. Colliers’ Executive Vice President Kristin Blount states that she “would bet on Boston regardless of cycle due strong attributes, such as high educational attainment and a robust workforce, that will sustain demand growth over the long haul.”

The upside for Class A landlords is that top-end assets (especially those considered “trophy”) are more likely to emerge quickly from the demand downturn than lower-end buildings, given pronounced tenant preferences. To that point, in Boston the Class A office market has sustained a lower vacancy rate than Class B throughout this cycle because the net drop in occupied space was not as harsh. Further, over the past four quarters Class A assets have comprised 90% of the city’s net absorption, which is more than their share of the city’s inventory.