**Boston Office Property Values Plummet Amid Tenant Exodus**
The value of office buildings in Boston has significantly declined due to the impact of Covid-19 and a subsequent wave of tenant departures. Kambiz Shahbazi, owner of four office properties in the city, reports that the assessed value of his buildings has dropped, but he believes the city’s 12% reduction over the past two years does not accurately reflect the true extent of the decline. In response, Shahbazi has filed challenges against the city’s assessments, aiming to reduce his tax liabilities, claiming that one property should be valued at nearly 50% less.
Shahbazi is not alone in his struggle; many Boston landlords are facing high vacancy rates and increased financing costs, which hinder their ability to upgrade or convert their properties for residential use. This year, owners have contested the assessed values of 388 commercial buildings in downtown Boston, marking an 83% increase from 2024 and the highest number of challenges since at least 2020. This trend poses a significant concern for the city, which relies heavily on property taxes to support its $4.8 billion budget.
“The values have been decimated,” Shahbazi stated, highlighting the severe vacancies in Class B and C buildings. He expressed concern that the city may eventually have to confront the financial repercussions of this situation. Boston’s reliance on commercial property taxes is greater than that of many other U.S. cities. Prior to the pandemic, the city enjoyed financial growth driven by rising property values and robust real estate development. However, with office vacancies exceeding 20% and a slow return of workers to downtown, property values have plummeted.
According to an analysis by Tufts University’s Center for State Policy Analysis and the Boston Policy Institute, Boston’s office buildings could lose nearly 50% of their value over the next five years, potentially resulting in a $1.7 billion loss in tax revenue. City officials aim to minimize fluctuations in property values to stabilize the budget, but as real-world values continue to decline, landlords are increasingly impatient and seeking to expedite the assessment process.
In the fiscal year ending in June, city officials reduced commercial property values by only 3% citywide, marking the first decrease since 2020. As of mid-July, only 11 of the 388 abatement applications in downtown Boston had been approved, primarily for smaller properties. Shahbazi’s property was among the few to receive an abatement, with the city agreeing to reduce its assessed value by nearly $2 million from an initial $14.2 million.
**FAQ**
**Q: Why are Boston office property values declining?**
A: The decline is primarily due to the impact of Covid-19, leading to high vacancy rates and a significant exodus of tenants from office spaces.