The Boston Metropolis Council handed a decision calling for the Wu administration to determine a Blue Ribbon Fee to deal with downtown workplace vacancies which have one watchdog warning of a virtually $2 billion finances shortfall in 5 years.
The Council this week handed the non-binding decision by a 12-0 vote, with one councilor, Sharon Durkan, voting current. The approval marks the second time the Council has indicated its assist for such a fee.
Launched by Councilor Ed Flynn, the measure requires town to determine a fee composed of enterprise leaders, metropolis and state officers, neighborhood advocates and different related consultants “to study the impact of the office vacancies and recommend strategies to fill these vacancies, address city budget revenue, and ensure the long-term economic vitality” of Boston and the encompassing area.
“Vacancy rates impact the value of real estate, which in turn impacts the amount of property taxes the city collects,” Flynn stated at this week’s Council assembly.
Flynn referenced a report launched final week by the Boston Coverage Institute along side the Middle for State Coverage Evaluation at Tufts College that projected workplace vacancies might go away town with a $1.7 billion finances shortfall over the following 5 years.
The potential shortfall is pushed by a projected 35-45% decline in workplace values in 5 years, in comparison with the 20-30% decline in values BPI and Tufts initially projected in a report final yr, when it was estimating a $1.2-$1.5 billion shortfall.
The most recent report estimates {that a} $1.4 billion finances shortfall is a best-case situation with town going through a income shortfall of as much as $2.1 billion in 5 years.
Flynn additionally cited a report from the actual property agency Cushman & Wakefield that discovered the workplace emptiness price in Boston is at 17%, up from 15.1% final yr.
Vacancies are impacting workplace gross sales transactions, in keeping with Flynn, who stated that “over the last year, a number of high-profile buildings in the downtown have sold for large discounts.”
An workplace constructing at 101 Arch St. bought for $78 million in comparison with its 2005 gross sales worth of $121.7 million, and One Lincoln St., previously often called the State Road constructing and now HarborVest, bought for $400 million at a foreclosures public sale in March this yr, lower than half of its worth a couple of years in the past, he stated.
He additional talked about 99 Excessive St., which bought for $227 million in late April in comparison with what it was purchased for at $273 million in 2005. That constructing’s assessed worth is $373.7 million, Flynn stated.
These dynamics, vacancies and the ensuing falling workplace values, all exacerbate a metropolis finances construction that derives roughly three-quarters of its income from property taxes, with a 3rd of that income coming from industrial properties, in keeping with the decision accepted by the Council.
“Commercial real estate executives in Boston have expressed serious concerns about the future of the city’s office space, and asked for assistance from local, state and federal officials to play a key role in helping to bring more workers and foot traffic back downtown,” the Flynn-led decision states.
“There are also continued concerns that falling commercial property prices would spike property taxes for residential homeowners.”
Householders on common noticed a double-digit improve of their property taxes for his or her third-quarter payments this previous January.
“Addressing our office vacancies is also a critical component to a revitalized downtown, and filling office vacancies will also be important in ensuring the stability of our city’s tax base and budget,” the decision states.
Mayor Michelle Wu’s workplace didn’t reply to a request for touch upon the Council’s push for a Blue Ribbon Fee.
Wu struck a extra optimistic tone concerning the metropolis’s downtown actual property market final week, nonetheless, when she was requested by reporters to reply to the newest projections in BPI’s workplace vacancies report, and once more this week when signing town’s $4.8 billion finances for fiscal yr 2026.
“It’s unclear where their facts are coming from,” Wu stated of BPI. “Last year’s report also stated that there would be, over the next five years, a $1.5 billion revenue loss. We are 20% into that next five-year period now and have not experienced a revenue loss whatsoever. Our budget is balanced.”
Wu additional described BPI as a “shadowy organization” that’s “looking to tear down the city’s progress.” She had dismissed final yr’s report by BPI as “false information.”
At a finances signing ceremony final Monday, Wu additionally described town’s funds as sturdy, whereas talking to the potential financial impacts from the Trump administration’s threats to chop federal funding to Boston and different sanctuary cities, slightly than falling workplace values and the ensuing decline in industrial income.
“Although we are facing the same uncertainty that cities everywhere are dealing with right now, the reality is that Boston is in the best possible position to weather this moment,” the mayor stated.
Wu talked about her stalled tax shift laws, which seeks to decrease residential taxes by shifting extra of town’s tax burden onto industrial properties, to deal with the impression of falling workplace values on town finances, when talking with reporters final week.
The laws was killed by the state Senate late final yr amid opposition from the industrial sector, dealing Wu a political defeat after her yearlong battle to get it handed forward of this previous January’s property tax payments.
There’s been no motion on her refiled tax invoice, Wu stated, because it was handed by the Council and despatched to Beacon Hill for a 3rd time in February.
