Financial firm Eaton Vance could cut its footprint by as much as 25 percent when it moves into the under-renovation One Post Office Square. Photo by James Sanna | Banker & Tradesman Staff

If judged only by the headlines in the industry press, you would think the Boston office market is positively cooking. 

“Boston Tops the List of Expanding Office Markets,” declares the Boston Real Estate Times, while GlobeSt. recently offered a similarly bullish take. This publication, too, carried similarly sanguine takes from industry analysts last week. 

But here’s the question: How hot can the office market truly be when the actual offices remain devoid of actual flesh-and-blood human beings? 

Just 30 percent of downtown Boston office space is occupied with real, live workers on any given day, according to one industry expert who should know the numbers. 

And that’s probably a best-case scenario. 

Misleading Statistics 

The disconnect between glowing headlines and discouraging reality stems from a misleading take on the various stats typically used to measure the health of the commercial real estate market. 

Boston may very well have “consistently outperformed the top 12 U.S. office markets during the pandemic,” as the story cited above notes, sourced to a recent report by commercial real estate firm CBRE. 

But given how battered the sector is right now across the country, that’s not saying much. 

Sure, the amount of sublease space on the market has shrunk, but it’s still roughly 50 percent higher than the Before Times. 

And what about the overall vacancy rate – as in office space on the market, available for lease? 

That tops 12 percent across Back Bay, the Seaport and downtown, according to Newmark. Colliers reports that 20 percent of the area around North Station is sitting idle. 

But the most important number right now – both for the economic health of downtown Boston today and as an indicator of the challenges ahead – is not the amount of space officially leased by companies and other tenants. 

Rather, it’s number of people making the commute to downtown Boston each day, or the average daily occupancy rate. 

By that measure, Boston is a laggard, not a leader. The 30 percent of downtown offices that are filled each day – again, an at-best figure – is below the national average of 36 percent. 

Footprints Shrink in New Leases 

Some of this can be laid directly at the feet of our never-ending pandemic. 

The Delta variant put a major crimp in many companies return-to-work plans in the fall, and now the new Omicron variant threatens to push that date well into 2022. 

But something else is also clearly going here, a paradigm shift accelerated dramatically by the pandemic, away from traditional office work in favor of remote work and hybrid schedules. 

Office space in downtown Boston is expensive, and companies are figuring out they don’t need as much as they once thought they did, and are pocketing the savings. 

Eaton Vance’s pending deal to move crosstown from Two International Place to One Post Office Square, which is undergoing a $300 million revamp, is a case in point. 

The financial services firm estimates will lease between 250,000 to 275,000 square feet at its new Post Office Square headquarters, according to the Boston Globe. 

On the high end, that could mean a drop of nearly 25 percent from the 325,000 square feet Eaton Vance currently leases. 

Ashley Lane, senior vice president at Perry CRE in downtown Boston, noted the commercial real estate firm is busy now working with firms interested in shrinking their office footprints and capitalizing on the savings. The firm even has a proprietary model it uses when consulting with firms on how much space they actually need in this new environment. 

“It is real savings,” Lane said. “We are really optimistic this is going to end soon, but it is undeniable we are still in the pandemic.” 

Is Low Occupancy Viable? 

How soon the pandemic will end is debatable. In the meantime, a rocky transition looms in the months and maybe even years ahead for downtown Boston.  

With the once-mighty flood of commuters down to a trickle, restaurants that were once mainstays of the city’s business community having closed. 

Lane said the brokerage team at Perry goes out to lunch each day, doing its part to keep restaurants in the business district afloat. 

But just finding a place to keep can be a challenge. 

“So many of our favorite lunch places are now probably gone for good,” Lane said. “You just take what you can get. Most of the food trucks are gone, which is a real bummer.” 

Scott Van Voorhis

And the struggles facing downtown restaurants and shops may very well be a preview of the challenges ahead for the downtown still mostly empty office towers. 

The real estate investment firms that own Boston’s office towers and buildings are fairly well-capitalized, so they don’t face an immediate financial crisis. 

Yet an office market only a third- or even half-occupied each day with workers is not a viable long-term situation or investment. 

Are companies going to pay for expensive office space indefinitely when they have no use for it? 

The next six months to a year are likely to be pivotal time for the future of downtown Boston, so stay tuned. 

Scott Van Voorhis is Banker & Tradesman’s columnist; opinions expressed are his own. He may be reached at sbvanvoorhis@hotmail.com.