Boston Homeowners Face Rising Tax Bills Amid Commercial Property Decline
Boston homeowners are absorbing a disproportionate share of the city’s property tax burden as the metro’s CRE sector declines. Office buildings, once responsible for more than one-third of the city’s tax revenue, have seen property values fall dramatically by over 50%, in some cases since 2019. As the value of Boston’s commercial properties declines, the financial burden is increasingly shifting to residential homeowners.
Office-Building Values Plummeted, New Commercial Development Has Stalled
The city’s office market entered a period of unprecedented weakness. Vacancy rates surged from 6.7% in 2019 to a record 14.2% in 2025, according to CoStar. With remote and hybrid work models entrenched post-pandemic, demand for traditional office space dropped. This trend has deterred new commercial development and is highlighted by recent high-profile defaults. In March 2025, One Lincoln, a 1.1-million-square-foot tower refinanced for $1 billion in 2022, was sold in a foreclosure auction for just $400 million.
Mayor Wu’s Push to Shift Taxes Meets Fierce Political Resistance
Mayor Michelle Wu is pursuing legislative relief aimed at shifting more of the property tax burden back to the commercial sector. Business leaders argue that raising commercial taxes would further discourage office leasing and delay recovery, ultimately undermining the goal of revitalizing downtown. Wu’s prior efforts to secure this shift through the Massachusetts legislature were unsuccessful, and she now faces heightened scrutiny as she seeks re-election.
Key Takeaway for Multifamily Investors
As the cost of homeownership in Boston continues to rise through increased tax burdens and limited affordability, this creates a pressing demand for housing development. Developers and investors that can deliver attainable, efficient rental product in key submarkets stand to benefit from this structural shift in the city’s housing economy.
Growing Renter Pool
Higher homeownership costs are keeping more households in the rental market longer, supporting strong occupancy and rent growth.
Resilient Asset Class
Multifamily remains a stable option in high-cost cities, attracting demand even in uncertain economic environments.
Policy Tailwinds
Affordability pressures may lead to zoning reforms and development incentives, especially for projects targeting middle-income renters.
