Boston, MA Retail Market Report Q2 2026

Boston’s retail market remains exceptionally tight despite slower leasing activity, with vacancy at 2.6% and availability at 2.9%. These levels place Boston among the tightest major retail markets nationally, with availability well below the 4.8% national average. Trailing 12-month leasing volume totaled approximately 2.4 million square feet, 22% below the three-year average, reflecting greater caution among tenants. Annual net absorption registered negative 335,000 square feet, although second-quarter absorption improved to more than 300,000 square feet and marked the first positive quarter since the third quarter of 2024. Demand remains particularly evident among grocers, fitness operators, and experiential concepts, while improving transit ridership has supported activity in urban locations such as Back Bay, the Seaport, and Financial District. Asking rents average approximately $29.00 per square foot, representing a 12% premium to the national average.

Key Findings

• Boston’s retail market maintains tight supply conditions, although leasing demand has moderated and tenant activity has slowed from recent years.
• Limited development, high preleasing levels, and ongoing demolition activity should restrict competitive supply and support occupancy across existing retail properties.
• Investment demand remains healthy for well-leased assets, with private capital leading transaction activity while institutional and public investors increase their presence.

 

Boston Retail Supply & Demand Dynamics

Source: CoStar Group, Inc.

 

Boston Demographics

Source: Oxford Economics

• Unemployment rate: 4.3%
• Current population: 5,044,248
• Households: 1,990,720
• Median Household Income: $123,252

 

Boston remains the primary economic center of New England, supported by a metro population of more than 5 million residents and a diverse employment base. Healthcare, education, professional services, financial services, biotechnology, and other knowledge-based industries provide important sources of regional economic activity. Real GDP increased 3.2%, placing Boston 13th nationally for growth, while the metro ranks seventh in total GDP. Near-term labor conditions have softened, however, with employment roughly flat to slightly negative over the past year and unemployment at 4.3%. Education and health services have provided some stability, while financial activities, information, and professional and business services have experienced employment declines.

 

Population, Labor Force, & Income Growth

Annualized Rates of Growth | Source: Oxford Economics

 

Boston Retail Construction

Retail construction remains limited across Boston, with approximately 587,000 square feet underway across 25 properties, equivalent to only 0.2% of existing inventory. Importantly, approximately 96% of this pipeline is preleased, substantially reducing the amount of speculative space expected to compete with existing properties. Development activity sits modestly above the three-year average but remains well below Boston’s 10-year historical construction average. Construction starts reached approximately 314,000 square feet during the second quarter across two properties, representing an increase from the same period last year. The largest project underway is a roughly 303,000-square-foot auto dealership development in Danvers scheduled for completion in 2028.

SF Construction Starts

Source: CoStar Group, Inc.

SF Under Construction

Source: CoStar Group, Inc.

Boston Retail Sales

Boston recorded approximately $1.5 billion in retail sales volume over the trailing 12 months, close to its recent annual average and indicative of sustained investor interest. Second-quarter transaction volume approached $400 million, increasing approximately 11% from the same period a year earlier. Market pricing has held near $270 per square foot, compared with roughly $250 per square foot nationally, reflecting Boston’s constrained inventory and gateway-market characteristics. Sales comparables completed during the past 12 months averaged approximately $266 per square foot and carried an average 7.3% cap rate, with a 7.0% median cap rate. Private investors represented approximately 72% of trailing 12-month sales volume, reinforcing their position as the dominant source of acquisition capital. At the same time, REIT/public and institutional investors increased their combined participation to approximately 17%, while user-buyer activity declined. Higher interest rates continue to influence underwriting and transaction velocity, but retail investment has generally proven less dependent on leverage than several other commercial property sectors.

Sales Volume

Source: CoStar Group, Inc.

By the Numbers

Q2 2026 | Source: CoStar Group, Inc.

• Sales Volume: $404M
• Price Per SF: $270
• Cap Rate: 6.8%
• Vacancy Rate: 2.8%
• Rent Growth: 2.5%
• Asking Rent Per SF: $29.05
• Under Construction: 567K SF
• SF Delivered: -24.4K
• SF Absorbed: 277K