BOSTON — The pandemic is drastically reshaping commercial real estate across Boston, and some experts are questioning if, when and how the demand will return to the city.
Many large companies have left their leased offices in downtown Boston resulting in a vacancy rate of over 10 %.
There’s currently over four million square feet of available sublease space in Boston. That’s more than double the amount that became available after the Great Recession of 2008 and the early 2000s tech bust.
According to a survey from the Massachusetts Competitive Partnership, nearly half of Massachusetts workforces aren’t expected to return to the office even after a COVID-19 vaccine is available.
That survey also found that about 60 percent of businesses are considering moving out of the Commonwealth or allowing for more work to be performed remotely.
“Businesses aren’t willing to make decisions right now. There’s a lot of uncertainty in the market,” said Liz Berthelette, research director with commercial real estate brokerage Newmark.
The current uncertainty is a stark contrast from the situation pre-pandemic when Boston had one of the strongest markets in the country.
“How we come out of this and what the recovery looks like remains to be seen,” said Berthelette.
The impact on restaurant and retail spaces has also been widespread across every corner of the city.
“It’s not just the amount of space that’s available. We are seeing more quality space coming on the market,” said Ann Ehrhart, owner and co-founder of the commercial real estate firm Boston Urban Partners.
Ehrhart said the growing number of cleared out spaces is giving developers and investors unique opportunities to convert spaces into other uses.
“I think it’s going to lead to conversations on how much retail space do we need in the city of Boston,” explained Ehrhart. “It’s also a great way for some newer fresher brands to come to the market and test it out.”
While the outlook may appear bleak for commercial real estate, there are certain commercial spaces that are in high demand at the moment. That includes distribution warehouse space, lab space for life sciences research and space for Biomarketing companies.
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