Hines' South Station Tower, designed by Peli, Clarke & Partners, is nearing completion. Photo by James Sanna | Banker & Tradesman Staff
Law firms in the market for new office space in Boston are in a strong negotiating position to extract heavy tenant concessions from landlords, according to a new brokerage report.
Boston ranks near the top of U.S. metros in tenant allowance and rent concessions offered by landlords for class A office space, Colliers reported.
Law firms willing to sign a 10-year lease can expect landlords to offer $175 to $200 per square foot in tenant allowances, and 10 to 15 months in rent abatement.
“While TI allowances have now reached or exceeded $100 per square foot in 15 surveyed markets, they often fail to cover the full cost of improvements due to soaring material prices and a persistent skilled labor shortage,” Colliers researchers wrote in the report. “In response, landlords are requiring longer lease commitments to offset rising costs, adding complexity to lease negotiations. As expenses continue to climb, firms are pushing for higher TI allowances to make their space investments feasible.”
High-rent coastal markets dominate the list of cities where landlords are offering the highest rent concessions and tenant allowances.
New York landlords are offering TI allowances of $150 to $175 per square foot and 15 to 18 months of rent abatement, while in San Francisco, tenants can expect offers of up to $225 per square foot for TI allowances and 10 to 15 months of rent abatement.
Law firms inked over 1 million square feet of office leases in Boston during 2024, including Jones Day’s decision to lease 41,000 square feet and become the first tenant at the South Station Tower scheduled for completion this year. Ropes & Gray renewed a 413,000-square-foot lease at the Prudential Tower.
Boston also has benefited from an influx of out-of-market firms establishing new offices in the city through acquisitions or organic growth, Colliers noted.
Recent arrivals in Boston include Simpson Thacher & Bartlett, Paul Hastings, Blank Rome, Covington & Burling, Arnold & Porter and Akin Gump Strauss Hauer & Feld, Reuters recently reported.
According to Colliers, Boston’s central business district had nearly 728,000 square feet of positive absorption in 2024.
“While Boston faces challenges, tenant demand remains strong, driven by professional, financial, and legal sectors, supported by the city’s robust education and medical presence,” the report states. “Boston law firms consistently commit to high-quality office environments, and renewals dominate market activity.”
