The CRE Perspective on Boston’s Tax Landscape

In Boston, like many major cities, addressing shortfalls in tax revenue has taken center stage. And like other metro areas, there’s the familiar, old saw about who should absorb more of the burden. There are arguments to be made (and that are being made) on both sides, with one favoring a higher burden on commercial property owners and the other pushing for individual cities and towns to address both tax increases as well as household relief on a town-by-town basis.

In recent weeks, the Senate sent a clear message in defeating a bill proposed by Boston’s Mayor Wu, who proposed a shift of tax burden to the commercial sector. At the heart of the debate was providing relief for seniors and homeowners who both face rising energy costs along with property taxes.

To read the headlines alone, it may seem like a simple debate between two sides: You can either protect small businesses and commercial property owners from spiraling costs due to inflation and tariffs, or you can provide relief for homeowners who can’t afford a higher cost of living. The actual state of affairs, however, is far more nuanced. In terms of the recent rejection of Mayor Wu’s proposal, the alternative tax relief bills proposed by the Senate include specific provisions for seniors and residential homeowners while also sparing commercial property owners the burden of absorbing significant increases.

The Realities of the Commercial Property Economy

While the headlines depict political sparring between opposing factions, taking a peek behind the scenes shows plenty of active negotiating and deal-making taking place. In a similar way, high-profile lease agreements and property transactions can make it seem like owners and managers of commercial properties are bursting at the seams with tenants. Sadly, that is not the case, even with some significant deals in the Seaport District that closed at the end of last year. 

According to a recent report from the Boston Business Journal, Boston’s office market began 2026 with more vacancies than any other Northeastern city. In once-hot communities like Cambridge, lease activity has remained stagnant for years, while the life sciences market across the region is just now beginning to see properties become available that were under development in the construction ramp-up that began prior to the 2020 pandemic.

Furthermore, unlike residential property prices, Boston’s commercial portfolio continues to decrease in value. Adding to the tax burden of commercial property owners will only lead to higher lease rates in a city already starved for tenants at the middle and lower tiers of the marketplace, to say nothing of the price cuts happening at the higher end of the property spectrum.

Working Together in a New Era of Work

There is little doubt that Boston, like many cities, is facing stubborn headwinds resulting from remote work and increasing costs of doing business. Current proposed alternatives to Mayor Wu’s bill take a targeted approach to tax relief, allowing municipalities to direct rebates to their community’s most vulnerable residents in years where property taxes increase past a certain threshold.

As local leaders and developers simultaneously look for creative solutions to convert empty office buildings into places that support modern work/life arrangements, it’s important to consider the implications of all the potential solutions for solving budgetary dilemmas. The commercial real estate community stands ready to help devise recommendations that protect the city’s immense value to employers and employees alike without limiting its attraction to new occupiers that haven’t yet experienced its greatness.