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A new report from McKinsey & Co., commissioned by the Baker administration, suggests downtown Boston’s office market could be in for a rough ride as remote work takes hold among tenant companies. But a leading industry voice is skeptical.
Tamara Small, CEO of the commercial development group NAIOP Massachusetts, said the report’s findings on office space demand are premature.
“It’s conflating a hybrid work schedule with a need for less office space, and it’s early to make those conclusions. What we’re seeing in the market is a number of tenants making commitments, and we’re seeing a real interest in getting employees back in the office,” Small said.
The McKinsey Future of Work Report predicted office demand in the city of Boston could gradually shrink by 12.7 million square feet to 20.6 million square feet depending on what kinds of remote-work options companies chose. Similar 12 percent and 19 percent drops were predicted for suburban submarkets, although the report’s authors suggest Greater Boston’s suburbs inside the Interstate 495 belt won’t be as severely effected.
While major office leases have declined sharply in the past year, several companies have made major commitments for expansion in Greater Boston. Facebook is reportedly tripling its office space in Kendall Square with a sublease at 50 Binney St. And fitness tracker manufacturer Whoop made a commitment in May for 121,000 square feet at Related Beal’s Commonwealth Building in the Fenway for an estimated 1,000 employees.
“Tour activity is up and sublease space is down from the high in December. There is real optimism about the future, particularly for the third quarter,” Small said.
