Federal Office Lease Cancellations Shake Massachusetts

Federal lease cancellations put key Massachusetts office spaces at risk, impacting landlords and the commercial market

March 28, 2025

The federal government occupies 6M SF in Massachusetts, with 1.7M SF leased in private buildings and 4.3M SF federally owned.
More than a dozen federal leases in the state have been canceled, including large offices in Northborough, Lowell, and Hadley, though some cancellations have been reversed.
The uncertainty is making it hard for landlords to plan, raising concerns about the government’s long-term stability as a tenant.

Key Takeaways

Government Leases in Flux

Massachusetts is feeling the impact of the federal government’s shifting real estate strategy. The state has 115 federal office leases, with some as large as 220K SF, like the FBI’s Boston field office, according to Bisnow.

The Department of Government Efficiency (DOGE) recently announced hundreds of lease cancellations, only to walk back some decisions last week. An updated tally from JLL found that 657 federal leases, totaling 8M SF nationwide, are still being terminated, including more than a dozen in Massachusetts.

Which Offices Are Being Cut?

Some of the largest canceled leases include:

21K SF in Northborough (Carruth Capital)
37K SF in Lowell (Anchor Line Partners)
72K SF in Hadley (The Pearson Cos.)

Adding to the uncertainty, the GSA briefly released a list of federally owned buildings that may be sold, including the John F. Kennedy Federal Building and Volpe National Transportation Systems Center in Cambridge.

Boston Office Closures and Future Risks

Several federal agencies are downsizing in Massachusetts:

The Department of Education is laying off 1,300 employees and closing its office at 5 Post Office Square.
The Small Business Administration (SBA) is leaving the O’Neill Federal Building as part of a federal crackdown on sanctuary cities.
The IRS has rescinded lease cancellations in Worcester and Springfield, but other agencies, like the Department of Agriculture and Geological Survey, are still vacating offices.

Several other major leases could be at risk in the coming years due to termination clauses or upcoming expirations:

92K SF – FAA, Burlington (Termination: 2028)
59K SF – SEC, Boston (Termination: 2026)
104K SF – Army Corps of Engineers, Concord (Expiration: 2027)

What’s Next?

Experts expect more lease cancellations as agencies continue evaluating their office needs. This uncertainty is making it difficult for landlords to plan for potential vacancies.

“The big problem is that it’s hard to market space when tenants aren’t sure if the government will actually leave” said Darian LeBlanc of Cushman & Wakefield.

Despite these challenges, Boston’s office market is showing signs of recovery. After 10 quarters of negative absorption, leasing activity rebounded in late 2024, with 1.9M SF signed in Q4, according to CBRE.

“Boston is a strong market,” said Hunneman EVP Trey Agnew. “These buildings will get leased, but it will take time.”

Still, the government’s reputation as a stable tenant may be in question moving forward.