BOSTON – This week, Boston City Councilor Ed Flynn passed a resolution again calling for the establishment of a Blue Ribbon Commission – made up of business leaders, city and state officials, neighborhood advocates, and other relevant experts – to study and make recommendations regarding the issue of Downtown office vacancies. This follows a similar resolution from Councilor Flynn passed by the Boston City Council last year. Similarly, Councilor Flynn held a hearing in 2023 on bringing back all City of Boston Board meetings and related business in-person, with a hybrid option for the public, in an effort to both bring much-needed foot traffic and economic activity downtown, along with improving community engagement.

Since the outset of the COVID-19 pandemic, many of Boston’s neighborhoods, especially Downtown Boston and the Financial District, have been negatively impacted by office vacancies and decreasing building values due to remote work and a lack of foot traffic. According to a report by the real estate firm Cushman & Wakefield, the office vacancy rate in Boston is at 17%, up from 15.1% last year. The latest research from Boston Policy Institute and Tufts University’s Center for State Policy Analysis also finds that due to the decreasing value of office spaces, there is now a potential shortfall of $1.7 billion to $2.1 billion in city revenue over the next 5 years. The Report also found that office values are likely to fall 35-45% from 2024 levels, which is far higher than the 20-30% decline anticipated from last year’s findings, and an increase from the last projection of $1.2 billion – $1.5 billion.

Vacancy rates impact the value of real estate, which in turn impacts the amount of tax revenue that they generate. Over the last year, a number of high-profile buildings in Downtown have sold for large discounts, including 101 Arch Street – sold for $78 million compared to what it was bought for at $121.7 million in 2005. One Lincoln Street, formerly known as the State Street Building and now HarborVest, was sold for $400 million at a foreclosure auction in March this year and less than half of its value just a few years ago. 99 High St, sold for $227 million in late April, was previously bought for $273 million in 2005, and $100 million below its assessed value of $373.7 million.

“In the final analysis, with falling commercial property values, over 70% dependence on property taxes, and more than 50% of city land absorbed by our large nonprofit partners – we have long-term fiscal issues to address in the City of Boston. It is simply unsustainable for all sectors of our economy to continue to work remotely from home and contribute to declining revenue,” said Councilor Flynn. “It may not be popular, but the truth is that there is no such thing as a free lunch. For the good of the City of Boston- the public sector, business leaders, and nonprofit partners need to prioritize in-person work. With global economic issues, high interest rates, and a slowdown in development in the city – now is not the time for significant tax increases on residents or businesses. We need to exercise fiscal responsibility and discipline. Boston works best when we work together.”

For more information, please contact Councilor Flynn’s office at 617-635-3203 and [email protected].

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