Fidelity Investments' Commonealth Pier office complex/Image courtesy of Pembroke
New brokerage research uses a non-traditional yardstick to track office usage in Boston: power and water consumption disclosures under a city ordinance designed to reduce greenhouse gas emissions.
Local firm Hunneman used submissions under Boston’s Energy Reduction and Disclosure Ordinance [BERDO], which tracks commercial buildings’ energy and water consumption, to add a new data point on return-to-office activity.
Water usage per occupied square foot increased 13.2 percent, which indicates that employee attendance has risen from 2.5 to 3.5 days per week and continues to rise, potentially increasing office demand, the Boston-based brokerage said. The data encompassed 58 office buildings that are at least 30,000 square feet and reported water consumption data to the city in every year from 2019 to 2024.
“The CRE cycle is not one that snaps its finger and changes, but the sentiment is shifting,” said Mark Fallon, Hunneman’s director of research and strategy.
Hunneman used office landlords’ BERDO submissions to Boston’s Energy Department to provide an alternative to the keyswipe data from Kastle Systems and other widely-cited measures of office foot traffic. Overall, water consumption plateaued at roughly one-third of 2019 levels between 2022 and 2024, reflecting overall lower occupancy, while class A buildings used just 17 percent less water than 2019.
Fidelity Investments’ recent mandate for five-day-per-week office attendance was accompanied by its withdrawal of a sublease listing for its 245 Summer St. headquarters. The financial services giant also is planning to reoccupy its 750,000-square-foot Commonwealth Pier office complex following a lengthy redevelopment project.
“When you look at the Fidelity return-to-office and Fidelity taking back the Summer Street sublease because there is not enough room at Commonwealth Pier, I’m pointing toward increased momentum,” Fallon said.
Average lease requirements in the market are approximately 15,000 square feet, however, indicating a slow pace of improvement in vacancy rates.
Across Greater Boston, the office vacancy rate is now 18.9 percent, according to Hunneman data. The 13.7 million-square-foot Cambridge office market continues to struggle with a 20.1 percent vacancy rate, including 22.1 percent in the Class A sector.
East Cambridge’s office market has been hit by cutbacks by the life science sector, including companies that lease a combination of office and lab space.
Another factor inhibiting office usage in Kendall Square, which has a 21.5 percent vacancy rate: tech companies tend to have more remote-work friendly policies than industries such as financial services. No office leases bigger than 35,000 square feet have been signed in Cambridge this year.
