Life Sciences Fuel Boston's Office Market Surge with 13.7M SF Under Construction

How Life Sciences are Driving Boston's Office Market

Despite the economic challenges of recent years, Boston's office market has remained resilient, thanks in large part to the city's thriving life sciences sector. This industry has been a key driver of construction and development in the metro area, even as construction starts have seen a significant decrease. Here's a closer look at how life sciences are shaping Boston's office market.

Boston: A Leader in Development

As of October 2023, Boston boasted over 13.7 million square feet of office space under construction, making up 5.3% of the total stock. This figure is significantly higher than the national average of 1.5%. In fact, Boston's development pipeline is the largest in the nation, surpassing other major markets like Miami and San Francisco. Notably, out of the 49 properties under construction in Boston, 36 are life sciences projects.

One of the most significant projects underway is the $545 million FORUM, a 350,000 square foot project by Lendlease and Ivanhoé Cambridge. The largest property currently under construction is the second phase of the Fenway Center, a 960,000-square-foot project that broke ground in June 2023.

Office Market Transactions in Boston

Despite a year-over-year drop in the average price per square foot, Boston's office market has performed on par with other major metros in terms of transactions. The total investment volume for the first 10 months of 2023 was $1.46 billion, ranking Boston second among its peers, just behind Manhattan.

The largest deal of the year was the joint acquisition of two office buildings, Centerpoint – 41 Seyon St. and Centerpoint – 43 Foundry Ave., by CS Capital Management for a combined $444 million. Another significant transaction was Azora Exan Capital's $41 million purchase of 7 Post Office Square, a building in downtown Boston.

Coworking Opportunities in Boston

Boston's office market also offers ample coworking opportunities. As of October 2023, there were approximately 4.7 million square feet of coworking space in the city, accounting for 1.8% of the total stock. Major players in the Boston coworking market include Regus, WeWork, and Industrious.

One of the largest leasing deals in Boston over the past year was Deloitte's commitment to 138,000 square feet at the Millennium Partners owned Winthrop Tower. DivcoWest also secured a 62,000-square-foot lease from Astellas Pharma Inc at 441 Morgan Ave., a life sciences property currently under construction.

In conclusion, Boston's life sciences sector is playing a crucial role in bolstering the city's office market. With a robust development pipeline and a healthy transaction volume, the city's office market is well-positioned for continued growth.