Boston Office to Residential Conversion Skips the Lab Glut

The building that broke a $322 million bet never changed. Its tenants did not leave.

When BioMed Realty bought 1000 Washington St. and the connected 321 Harrison Ave. in the South End in early 2021, the plan was to turn 490,000 square feet of office into lab space. Boston was paying lab rents then and nobody wanted to be late. But the Massachusetts Department of Developmental Services stayed in its offices at 1000 Washington. So did the Board of Registration of Social Workers. You cannot rip out a floor and install a 10 foot air handler around a state agency that is still using the elevators. The lab conversion at that address never got off the ground.

On June 3, 2026, the keys went to the lenders.

I have had four separate conversations this month with people who read that headline and drew the same conclusion: empty labs, housing shortage, therefore apartments. It is a reasonable guess. It is also mostly wrong, and the way it is wrong matters if you own a condo in the South End, are shopping in South Boston, or are underwriting anything downtown. A business plan can change in a quarter. A floor to floor height cannot.

What actually changed hands on June 3

This was not a foreclosure auction on the courthouse steps. BioMed Realty, a Blackstone company, bought the two connected buildings from CIM Group and Nordblom in February 2021 for $314 million and financed them with a $322 million floating rate loan from a partnership of KKR Real Estate Finance Trust and AllianceBernstein. In June the deed went to that lender partnership, which Banker & Tradesman reported as an assumption of the $322.6 million mortgage. Tishman Speyer was named property manager on June 17.

The distinction is worth holding onto, because it tells you what happens next. Nobody bought this campus at a distressed clearing price that resets the block. A lender took title to protect a position. Lenders are not developers. They stabilize, they lease, and they sell later. The 321 Harrison side is not empty either. Monte Rosa Therapeutics signed for 63,000 square feet in December 2021, and PepGen, Pyxis Oncology, Nido Biosciences, Magnet Biomedicine and HilleVax followed in 2022. That half of the campus worked. The office half is what did not convert.

I wrote about a similar mechanic in Back Bay earlier this year, where the Park Square Building went to a conversion plan through a foreclosure rather than through a policy incentive. The pattern repeats: the debt gets written down first, and the housing question gets asked second.

The vacancy number depends on who you ask

You will see a lab vacancy figure quoted with a lot of confidence. Be careful with it, because the trackers do not agree, and the spread between them is wider than most of the moves they are describing.

Source	Measure	Rate
JLL, end of Q2 2026	Greater Boston lab vacancy	33.7%
Banker & Tradesman, Aug 2026	Boston proper lab vacancy	34.2%
Banker & Tradesman, Aug 2026	Suburban lab vacancy	29.0%
Savills	Boston and Cambridge combined	26.4%
Local brokerage tracking	Vacant lab space, region wide	16.6M SF

A range of 26.4% to 34.2% is not a rounding difference. It reflects real disagreement about what counts as lab inventory in a market where a lot of buildings are half converted and marketed both ways. The honest version is that roughly a third of Greater Boston lab space is empty and the absolute figure, 16.6 million square feet, is the one that actually means something. I have seen a 42% figure circulating. I could not source it to any named tracker, so I am not using it. The real number is bad enough without inflating it.

For scale: Greater Boston lab inventory more than doubled in roughly a decade, from 18.6 million square feet in 2012 to over 41 million by CBRE’s count. The Boston Globe put it closer to 48.4 million using a different definition. We built a second lab market on top of the first one and the tenants for it did not arrive.

Why a failed lab is a bad apartment building

This is the part that gets skipped, and it is the whole argument.

Purpose built lab space is close to the worst residential conversion candidate in the city. Labs carry roughly three times the mechanical equipment of an office building. They need 10 foot by 20 foot air ducts because lab air gets exhausted rather than recirculated. The floor to floor heights are taller, which sounds like a feature until you do the arithmetic: a 294 foot lab building yields about 15 rentable floors, where an apartment building of the same height gets 25 or more. Elevators, stairs and plumbing stacks all sit in the wrong places. Architect Troy Depeiza’s summary in the Globe was that it would take “a whole lot of rejiggering to make that work,” and that it “wouldn’t be efficient.”

Then there is basis. Lab construction runs about $1,200 per square foot, roughly 50% above office. A developer who paid lab land prices and built to lab specs is carrying a cost per foot that apartment rents in Boston cannot service. That owner does not convert. That owner waits, or re leases to an office tenant, or hands the keys to a lender.

Which brings the 1000 Washington story full circle. The failed lab conversion is the reason that building is still a plausible housing candidate at all. Because the state agencies never moved out and the lab buildout never happened, it is still an office building with office bones. The half of the campus that succeeded as lab, 321 Harrison, is the half that is now hardest to turn into anything else.

The South Boston conversion that adds 24 apartments and no supply

A few blocks away at 69 A Street, a five story building sits on a site that has been chasing a use since 2016. The BPDA approved adding stories to an old rivet factory that year. CIEE, a Portland, Maine nonprofit, bought it in 2018 and got approval in 2019 to make it a headquarters. Then the pandemic hit, CIEE never moved in, and in 2021 it signed a purchase and sale with a life sciences firm to turn the building into labs. The Zoning Board of Appeal rejected it. A mostly residential stretch of A Street was not going to get a lab.

The 2026 filing converts floors two through four into 24 residential units. That reads like 24 units of new South Boston supply, and it is not. Per the project filing with the Planning Department, the units are designated for participants in CIEE’s own international internship programs, on placements that run twelve to eighteen months. They are tied to one organization’s program. They will never be listed, never be leased on the open market, and never show up in any inventory count you or I can shop.

What is actually converting in the South End

The real South End conversion story is two old office buildings, and neither one is a lab.

At 615 Albany St., a former Boston University Medical Center administrative building of about 20,500 square feet, bought for $3.4 million in 2023, is becoming 24 apartments with 5 income restricted. The developer is adding a sixth story to get there.

The bigger one is 95 Berkeley St. at Chandler, an 87,250 square foot six story building that sold for $24 million and has a building permit valued north of $25 million. It becomes 92 apartments, 18 of them income restricted at 60% of area median income, with office and up to 1,700 square feet of retail staying on the ground floor.

Now look at the unit mix at 95 Berkeley, because this is the number that should change how a South End owner reads the news: 46 studios, 41 one bedrooms, and 5 two bedrooms. Eighty seven of 92 units are studios or one bedrooms. That is what an old office floor plate gives you when you cut it into apartments. Deep interior space, limited window line, small units.

If you own a two bedroom condo in the South End, 95 Berkeley is not your competition. If you own a studio or a one bedroom that you rent out, it absolutely is. Those are two completely different conclusions from the same press release, and the difference is a unit mix buried in a filing.

The pipeline loses an order of magnitude at every stage

Boston’s Office to Residential Conversion Program is a genuinely good policy. It offers a 75% property tax abatement for 29 years, compresses review to about six months, and as of the December 2025 extension had applications covering 1,517 homes across 27 buildings, including 284 income restricted units, targeting 1.2 million square feet of office. The application window now runs through December 31, 2026, with construction required to start by December 31, 2027. City figures since then have put the proposed total higher, around 31 buildings and 1,785 units.

Here is what those filings have produced.

The bottleneck is not zoning and it is not the abatement. It is construction cost and financing. At 31 Milk St., a 110 unit conversion, the general contractor’s estimate rose more than $10 million during pricing and the developer had to find a new contractor. That deal closed a $40 million construction loan only after stacking the 75% city abatement with a federal historic tax credit and a $4 million state grant. As one person close to it put it, they got all those subsidies and barely got the deal financed. Conversion costs frequently run north of $300 a square foot, construction costs are up roughly 20% since 2024, and about 75% of a conversion’s cost stays uncertain until permitting is done. One construction executive’s estimate is that roughly 75% of current proposals actually become housing.

Massachusetts just opened this tool to every city and town through H.5562, which I covered when the conversion zoning statute passed. More towns adopting it does not make any individual building cheaper to convert.

What my own closing data says about these submarkets

Rather than rely on a national tracker, I pulled every MLS PIN closed condo sale in these Boston submarkets for the twelve months ending September 17, 2026. This is the transaction record, not an estimate.

Submarket	Closings	Avg price	$/SF	Days on mkt	At or over ask
South Boston	325	$936,264	$850	87	29.2%
South End	287	$1,459,156	$1,179	89	34.8%
Midtown	102	$2,307,926	$1,463	129	12.7%
Waterfront	101	$1,639,317	$1,138	116	23.8%
Seaport District	59	$2,231,810	$1,690	92	30.5%
Financial District	6	$1,201,583	$1,066	166	0.0%

Read the bottom row twice. The Financial District produced six condo closings in a year. They averaged 166 days on market and sold at 92.6% of original list price. Not one of them closed at or above asking. That is the thinnest, slowest for sale condo market in downtown Boston, and it is precisely where the conversion pipeline is concentrated.

South End and South Boston look nothing like that. Both are moving in roughly 87 to 89 days with about a third of sales closing at or over ask. Those are functioning markets.

Now split the same closings by construction vintage, because this is where the supply question gets answered.

In the South End, post 2015 condos sold at $1,418 per square foot against $1,174 for pre 2000 buildings, and they took 140 days instead of 80. Midtown runs the other way, where the older stock is the slower half, so this is not a universal rule. But in the two submarkets this post is about, new product is not cheap and it is not fast. Anyone assuming that conversions will arrive as bargain inventory should sit with that for a minute.

What this means for rent, which is where conversions actually land

Almost all of this supply is rental, so the for sale comps only tell you half the story. Here are closed leases from the same MLS PIN pull, twelve months ending September 17, 2026.

Submarket	1BR avg rent	2BR avg rent	Closed leases
South Boston	$3,067	$4,063	628
South End	$3,403	$4,655	494
Waterfront	$3,842	$6,289	67
Midtown	$4,241	$6,696	87
Financial District	$4,100	$5,830	10

Downtown rents sit roughly $700 to $1,200 a month above South Boston for the same bedroom count. A developer converting an office floor plate downtown is underwriting to those numbers, not to South Boston’s. The idea that conversions arrive as cheap supply does not survive contact with the rent roll. They arrive as small units at downtown pricing, with an income restricted slice carved out by policy.

That income restricted slice is the part that genuinely adds affordability. At 95 Berkeley it is 18 of 92 units at 60% of area median income. At 615 Albany it is 5 of 24. Program wide it was 284 of 1,517 as of the December extension. Real, and modest.

What I would actually do right now

Steve’s read on this, and mine, is that these conversions are leading indicators worth tracking rather than headlines to react to. The refinement the data forces is about where and when.

If you are buying in the South End or South Boston: the conversion pipeline should not change your offer. Nothing in it lands in your timeline, and the units that do arrive are mostly studios and one bedrooms that do not compete with a two bedroom condo. Buy the building and the block.

If you are buying or underwriting downtown: this is where it matters. Six closings in the Financial District in a year at 166 days and zero at or over ask is a market with very little price discovery. Add several hundred conversion apartments into that and you have a rental submarket resetting while the condo submarket has almost no comps. Underwrite a longer hold and a wider exit spread than the glossy pro forma assumes.

If you own a small rental in the South End: 95 Berkeley is 87 studios and one bedrooms with a permit in hand. That is your competition, and it is closer than the citywide numbers suggest. Look at your renewal strategy for 2027 and 2028 now.

If you are selling: price against the vintage data, not the headline. New construction in the South End is sitting 140 days. If you are selling a renovated pre 2000 unit, you are in the faster segment and you should not let a nervous conversion narrative talk you into a discount you do not need to take.

The honest summary: Boston’s lab bust is enormous and real, the conversion program is working slowly and well, and the two are only loosely connected. Failed labs are mostly not becoming apartments, because the physics and the basis do not allow it. Old offices are. That is a smaller, slower, more local story than the headline suggests, and it is the one worth underwriting.

If you are weighing a purchase, a sale, or a hold in the South End, South Boston or downtown and want the closing data for your specific building rather than the neighborhood average, reach out and I will pull it. If you are trying to price a unit, the home value tool is a reasonable starting point before we talk.

Thanks,
Steve