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News release


Boston Skyline Tower Market Remains Healthy

JLL reports that Class B rents are pushing Class A rents in Boston Skyline Review 2014

BOSTON, April 8, 2014 – JLL’s spring Skyline Review reports that the city of Boston is undergoing a large-scale transformation through its expanding innovation, growing amenity base, ongoing urbanization, and tightening office fundamentals.

“While a few skyline towers face challenges with large vacancies, on the whole the skyline tower set continues to be healthy,” says JLL Research Director Lori Mabardi. “All boats are rising and rents are up 6.8% year over year, overall. The diversity of tenants wanting to locate in the city continues to spur healthy leasing activity overall. From large credit to small start-ups, Boston now appeals to all kinds.”

In Downtown Boston, the tower subset continues to experience strong leasing activity. A number of large blocks of space swayed the data, pushing the vacancy and availability rates up by 0.6 and 4.5 percentage points year-over-year to 13.4 and 21.3 percent respectively. The average skyline asking rent recorded a 6.8 percent year-over-year increase to $53.90 per square foot gross.

The 4.5 percentage point rise in availability can be attributed to three large blocks of space that are now listed on the market as future available. Goodwin Procter listed 415,000 square feet at 53 State, and will relocate to 360,000 square feet at 90-100 Northern Avenue in the Seaport. PwC listed 375,000 square feet at 125 High Street, and will relocate to 330,000 square feet at 101 Seaport Boulevard. AIG will vacate 250,000 square feet at 100 Summer Street in August will consolidate and expand at 99 High.

Low-rise buildings exhibited most of the gains, with rents rising 10 percent. As the Class B space has leased up, and pricing gap between low-rise and Class B spaces has narrowed, low-rise space has become attractive again. The leasing of this space has increased. The vacancy rate for this subset is now down to 11.7 percent.

The Class B market has benefitted has been the beneficiary of current conditions. As the Class B space has leased up, and the difference in pricing to low-rise has narrowed, low-rise space has become attractive again. The leasing of this space has increased with the vacancy rate now at 13.7 percent.

The Downtown market is currently undergoing a boom in construction of new multi-family and retail developments. This new growth, combined with the city’s expanding innovation economy, has continued to draw non-traditional office users to the Downtown neighborhoods. The Millennium Tower mixed-use development for example, upon completion, will create nearly 100,000 square feet of additional retail space in Downtown Crossing including a Roche Bros grocery store as the anchor tenant.

Back Bay
The Back Bay maintains its status as Boston’s tightest tower set with a vacancy rate of 4.0 percent. The market’s availability rate of 14.5 percent, however, could point to a potential softening of fundamentals in the near future. Market pricing in Back Bay towers remains the highest in Boston’s CBD. The average skyline asking rent grew to $63.40 per square foot gross.

With only 1.6 million square feet of existing tower space, the Seaport District remains a tight submarket with a vacancy rate at 9.6 percent compared to 13.4 percent Downtown. The submarket showed a $3 increase year-over-year reflecting the growing demand from established firms looking to be part of the surging neighbourhood.

Build-to-suit projects account for most of the ongoing office construction activity across Boston’s CBD. In the Seaport, construction for PwC’s build-to-suit at 101 Seaport Boulevard is underway, and Goodwin Procter’s at 90-100 Northern Avenue is scheduled to begin in April 2014. While the Seaport remains Boston’s  frontier for new development, the past six months have seen proposals for large-scale developments in both Downtown and the Back Bay.

2013 marked Greater Boston’s strongest years in office sales in the last six years. With nearly $5 billion of sales volume in 2013 alone, both the Boston CBD and suburbs continued to gain interest from both institutional and foreign investment funds. The Boston CBD saw a number of high profile trades in the last half of 2013.

Office Outlook
Boston is enjoying a large-scale transformation. With tightening fundamentals in the premium Class B segment will come a further tightening in the Class A sector for at least the next 12-24 months.
JLL’s Skyline Review is an analysis of the premium tower market – the core buildings of modern Boston. The Research group(hyperlink here) defines the city skyline as 44 Class A buildings that are taller than 15 stories, and at least 250,000 square feet or are architecturally significant.

About JLL
JLL (NYSE:JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual revenue of $4 billion, JLL operates in 75 countries worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3 billion square feet and completed $99 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has $47.6 billion of real estate assets under management. For further information, visit