Boston likely facing $1 Billion+ in lost revenue: BPI's new report details falling office values' impact

Boston's dependence on property taxes makes City especially vulnerable to downturn in commercial real estate

Boston Policy Institute, Inc is pleased to announce the release of its latest report, the Fiscal Fallout of Boston's Empty Offices, written in partnership with the Center for State Policy Analysis at Tufts University.

Vacant office space and the declining value of office buildings is an issue facing cities across the country and around the globe. The issue has been front page news on 60 Minutes, Bloomberg, and the Wall Street Journal. Boston is especially vulnerable because more than one-third of Boston tax revenue comes from commercial property taxes, by far the highest proportion among major U.S. cities.

This report helps us better understand the current issues facing the City of Boston and model the fiscal implications. Based on the expected decline in the value and prices of office space, we estimate that Boston will face a cumulative revenue shortfall of $1.2 billion to $1.5 billion over the next five years. This is not a short-term challenge but the arrival of a new normal, with annual tax collections after 2029 roughly $500 million below the current trend. This report looks at how Boston can compensate for this lost tax revenue, and the broader implications that turmoil in commercial real estate has for the local economy.

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