Market Insight Report Recap: Class A Demand Prompts Class B Questions

As uncertain economic conditions continue to plague commercial markets, landlords are becoming winners and losers based on their financial health, access to capital, and amenitized buildings. This was highly apparent in downtown building sales in late 2023: 110 Canal Street, 186 Lincoln Street, One Liberty Square, and 33-41 West Street all sold at significant discounts compared to their previous sale prices.

This trend puts heightened pressure on owners of Class B and commodity properties as tenant appetite continues to skew toward Class A properties. The demand for quality space and amenities shows no signs of relenting, prompting important questions about the future of Class B buildings. Upcoming lease expirations serve as another complicating metric, as many downtown office spaces remain under lease or sublease through 2026 and turnovers may impact market dynamics.

Tenants looking to make a move should keep a close eye: these factors may spell opportunity for corporate space users. Rents and other leverage factors have the potential to shift significantly as leases begin to turnover and, if buildings continue to change hands a discount, tenants may also reap the benefits in lowered rents and increased concessions.

For more information on the data behind these trends and expert occupier recommendations for the coming months, read Cresa Boston’s 2024 Downtown Market Insight Report.