Boston is one of the most resilient and knowledge-driven commercial real estate markets in the United States. Anchored by world-class universities, a thriving life sciences and biotech sector, and a diversified economy that spans finance, healthcare, and technology, the city consistently attracts both domestic and institutional capital. Whether you are financing a multifamily property in South Boston, acquiring lab space near Kendall Square, or purchasing a mixed-use building in the Seaport District, understanding Boston's lending landscape is critical to closing your deal on the right terms.
Clear House Lending provides commercial real estate financing throughout Greater Boston, from conventional commercial mortgages and SBA loans to bridge financing and DSCR loans. This guide covers current market conditions, loan programs, interest rates, and submarket-level insights to help you navigate the Boston commercial lending environment in 2026.
Need Financing for This Project?
Stop searching bank by bank. Get matched with 6,000+ vetted lenders competing for your deal.
What Does the Boston Commercial Real Estate Market Look Like in 2026?
The Boston commercial real estate market entered 2026 on a trajectory of cautious recovery and renewed investor confidence. Greater Boston saw a 12% year-over-year increase in overall sales volume in 2025, while industrial sale volumes reached a four-year high with average prices rebounding to $206 per square foot. The city's deep institutional anchors, including Harvard, MIT, Boston University, and Massachusetts General Hospital, continue to provide a demand floor that few other metros can match.
The office sector tells a nuanced story. Overall vacancy rose to 23.6% in Q3 2025, driven largely by the delivery of South Station Tower and 10 World Trade Center, which added roughly 900,000 square feet of new speculative supply. However, vacancy began stabilizing in Q4 2025 at 18.2%, ticking up only 10 basis points quarter-over-quarter. JLL reports that full-floor tenant searches increased 77% compared to the prior quarter, signaling renewed leasing momentum heading into 2026. Trophy and Class A assets in the Financial District and Back Bay continue to outperform, while Class B and C properties face higher vacancy and significant repricing.
The multifamily sector remains Boston's strongest asset class. The apartment vacancy rate compressed to 6.2% by Q3 2025, down approximately 100 basis points from the prior year. Net absorption reached 2,600 units in Q3 2025 alone, the strongest quarterly figure of the year. Average rents stand at $2,964 per month, placing Boston among the most expensive rental markets in the country behind New York and San Francisco. Year-over-year rent growth of 2.1% outpaces the national average of 1.0%, and the market is on track for its third consecutive year of approximately 2.5% annual rent increases.
Industrial properties posted strong fundamentals in 2025, with leasing volume jumping 36% above the prior year's total. Warehouse and distribution facilities accounted for nearly 70% of all sale volume. However, vacancy ticked up to 9.6% as recent deliveries absorbed into the market. Large-block activity remained strong through Q4 2025, with the top six transactions each exceeding 115,000 square feet.
Boston's life sciences sector, which distinguishes the market from nearly every other major metro, faces a period of recalibration. Lab vacancy reached 36.1% in Q3 2025 following a wave of speculative development during the pandemic. Despite this, demand is stabilizing. Net absorption turned positive in mid-2025, and major pharma companies including Biogen, Takeda, AstraZeneca, and Novo Nordisk continue making significant long-term commitments to Kendall Square and the broader Cambridge/Boston corridor.
What Types of Commercial Loans Are Available in Boston?
Boston borrowers have access to the full range of commercial real estate financing products. The optimal loan structure depends on your property type, investment strategy, financial profile, and timeline.
Conventional Commercial Mortgages are the standard financing tool for stabilized, income-producing properties across Greater Boston. These loans typically offer fixed rates for 5, 7, or 10 years with 25 to 30 year amortization schedules. They work well for office buildings, retail centers, and multifamily properties with strong occupancy and predictable cash flow.
SBA Loans are designed for owner-occupied commercial properties and remain one of the most accessible entry points for small business owners in the Boston metro. The SBA 7(a) program allows borrowers to finance up to 90% of the purchase price with down payments as low as 10%. SBA 504 loans provide long-term, fixed-rate financing for larger acquisitions. Massachusetts ranks among the top states for SBA lending activity, with SBA 7(a) approvals nationwide reaching record levels in FY2025, surpassing $10 billion in a single quarter.
Bridge Loans provide short-term capital for acquisitions, repositioning, or lease-up scenarios. In Boston's competitive market, bridge financing allows investors to close quickly on time-sensitive deals, particularly in the Seaport District and emerging submarkets where properties may not yet qualify for permanent financing.
DSCR Loans evaluate the property's income rather than the borrower's personal income, making them attractive for investors with complex tax returns or multiple properties. DSCR loan programs in Boston typically require a minimum debt service coverage ratio of 1.25x and down payments of 20% to 35%.
Hard Money Loans serve borrowers who need speed and flexibility above all else. These asset-based loans can close in days rather than weeks, making them useful for auction purchases, distressed acquisitions, or properties that do not qualify for conventional underwriting.
Construction Loans fund ground-up development and major renovation projects. Given the $4.8 billion in development approved by the BPDA in 2025 and ongoing projects across the Seaport, South Boston, and Cambridge, construction financing remains a critical component of Boston's lending ecosystem.
What Are Current Commercial Loan Rates in Boston?
As of February 2026, commercial mortgage rates in Boston start as low as 5.18% for the most qualified borrowers and stabilized assets. However, rates vary significantly based on loan program, property type, leverage, and borrower profile.
Conventional commercial mortgages for stabilized properties range from approximately 5.18% to 7.25%, depending on term length and loan-to-value ratio. SBA 7(a) loans carry rates in the 6.50% to 8.00% range, while SBA 504 loans offer fixed rates starting around 5.64% through the CDC debenture portion.
Bridge loans, which carry more risk due to their short-term nature and transitional collateral, typically range from 7.50% to 10.50%. Hard money loans command the highest rates, generally falling between 9.00% to 12.75%, reflecting the speed and flexibility they provide.
DSCR loans for investment properties in Boston currently range from 6.25% to 8.50%, with rates heavily influenced by the property's net operating income relative to debt service obligations. Agency multifamily rates declined to 5.3% for seven to ten year fixed terms in Q4 2025, down 18 basis points from Q3, reflecting improved capital market conditions.
To estimate your monthly payments and debt service coverage, use our commercial mortgage calculator or DSCR calculator.
Which Boston Submarkets Offer the Best Commercial Investment Opportunities?
Boston's submarket dynamics create a diverse range of investment profiles. Each neighborhood carries distinct risk, return, and demand characteristics shaped by proximity to anchor institutions, transit access, and sector specialization.
Seaport District has transformed from an industrial waterfront into one of the most sought-after mixed-use corridors on the East Coast. WS Development is building out 33 acres comprising 7.6 million square feet of residential, hotel, office, retail, and cultural space. The 555,250-square-foot 10 World Trade project, designed for life sciences and office tenants, delivered in 2025. The former Seaport World Trade Center is being redeveloped into approximately 825,000 square feet of mixed-use commercial space with waterfront resilience features. Eli Lilly executed a 75,000 square foot lease at 645 Summer Street in the Seaport in late 2025.
Kendall Square and Cambridge remain the epicenter of the global life sciences industry. Despite elevated lab vacancy, the world's largest pharma companies continue doubling down on this location. Biogen signed a 15-year lease for its new corporate headquarters at 75 Broadway in Kendall Common. AstraZeneca is partnering with Boston Properties on a new 570,000 square foot lab facility. BioMed Realty acquired a Kendall Square complex for $361 million, and Phase 3 Real Estate expanded with a $25 million life sciences acquisition. For investors with patience for the recalibration cycle, Kendall Square remains one of the most valuable commercial corridors in the world.
Back Bay is Boston's premier Class A office submarket, home to major financial services firms, law practices, and corporate headquarters along Boylston Street and Copley Place. Office rents in Back Bay consistently rank among the highest in the metro, and the neighborhood's walkability, transit access via the Green Line and Orange Line, and proximity to upscale retail make it a perennial favorite for institutional investors.
Financial District anchors Downtown Boston with a concentration of banking, insurance, and professional services tenants. The neighborhood has seen growing interest in office-to-residential conversions, with Boston's extended conversion tax break program yielding 251 housing units either completed or under construction by 2025. This adaptive reuse trend creates unique opportunities for investors willing to reposition older Class B and C office stock.
South Boston continues its evolution from a working-class neighborhood into a high-demand residential and commercial corridor. Proximity to the Seaport, expanding transit options, and a young professional demographic drive strong multifamily demand and rising retail rents. Industrial properties in South Boston remain tightly held, with limited inventory driving premium pricing.
The Innovation District and Fort Point sit adjacent to the Seaport and attract technology startups, creative agencies, and coworking operators. The area's converted warehouse spaces and historic brick buildings command premium rents from tenants seeking character and proximity to the waterfront.
How Does Boston's Life Sciences Sector Impact Commercial Lending?
Boston's life sciences sector is the single most distinctive feature of its commercial real estate market and a major driver of lending activity. Greater Boston and Cambridge together form the largest life sciences cluster in the world, with more than 1,000 biotech and pharmaceutical companies operating in the metro area.
The pandemic era triggered an unprecedented wave of lab construction. Developers delivered more than four million square feet of new lab space in 2024 alone, most of it uncommitted at the time of delivery. This supply wave pushed lab vacancy to a record 36.1% in Q3 2025. However, the market shows clear signs of finding a floor. Net absorption turned positive in mid-2025, and vacancy declined by 20 basis points in the second half of the year as demand from both established pharma giants and emerging biotech firms began catching up with supply.
For commercial lenders, life sciences properties present unique underwriting considerations. Lab buildouts are substantially more expensive than standard office tenant improvements, often exceeding $200 per square foot. Lease terms for credit-worthy biotech tenants tend to be longer, typically 10 to 15 years, which provides income stability that lenders value. However, the specialized nature of lab space means that re-leasing costs and timelines can be significantly higher if a tenant vacates.
Investors considering life sciences acquisitions in Boston should focus on properties with strong credit tenancy, proximity to Kendall Square or the Longwood Medical Area, and buildout specifications that meet current market standards. Clear House Lending works with borrowers navigating the specific requirements of lab and biotech property financing.
What Should Borrowers Know About the Boston Commercial Loan Process?
The commercial loan process in Boston follows a structured path from pre-qualification through closing. Understanding each stage helps borrowers prepare documentation, set realistic timelines, and avoid delays.
The first step is pre-qualification, where a lender evaluates the basic parameters of your transaction: property type, location, purchase price or refinance amount, and borrower financial profile. This initial assessment determines which loan programs are the best fit and provides a preliminary rate indication.
Next comes loan structuring, where the lender selects the optimal program based on your property and goals. For example, an owner-occupied medical office in Brookline might qualify for an SBA 504 loan, while a value-add multifamily property in Dorchester might be best served by a bridge loan followed by permanent financing.
The formal application and underwriting phase involves detailed document review: rent rolls, operating statements, tax returns, personal financial statements, and a third-party appraisal. Boston-specific factors such as environmental assessments (particularly for waterfront or former industrial sites), zoning compliance with the BPDA, and rent stabilization analysis may add steps to the underwriting process.
Upon approval, the lender issues a commitment letter outlining all terms and conditions. After legal review, title clearance, and satisfaction of any outstanding conditions, the loan proceeds to closing. Standard timelines range from 45 to 60 days for conventional loans, 60 to 90 days for SBA loans, and as little as 7 to 14 days for bridge and hard money loans.
Contact Clear House Lending to begin the pre-qualification process for your Boston commercial property.
How Does Boston Compare to Other Major Commercial Real Estate Markets?
Boston's commercial real estate market occupies a unique position among major U.S. metros. While smaller than New York or Los Angeles in total transaction volume, Boston punches well above its weight in key metrics driven by its concentration of intellectual capital, healthcare institutions, and life sciences infrastructure.
Boston's multifamily market commands some of the highest rents in the country at $2,964 per month on average, trailing only New York City and San Francisco. The city's vacancy rate of 6.2% reflects healthy absorption, though it sits higher than the ultra-tight 2% to 3% rates seen in Manhattan. Cap rates for Boston multifamily assets generally range from 4.5% to 5.5%, comparable to other gateway cities and reflecting the market's perceived stability and growth potential.
On the office side, Boston's 18.2% to 23.6% vacancy range is in line with national trends for major metros, all of which are working through the post-pandemic office recalibration. The key differentiator for Boston is the life sciences overlay: a significant portion of what might be classified as "office" vacancy in other cities is actually lab space in Boston, subject to entirely different demand drivers and tenant profiles.
Industrial assets in Boston trade at a premium relative to Sun Belt markets due to limited developable land and strong last-mile demand from the metro area's dense population. Retail fundamentals have improved throughout 2025, with limited new supply and robust backfilling activity supporting rent stability across most suburban and urban retail corridors.
What Types of Properties Get Financed Most Often in Boston?
The distribution of commercial loan originations in Boston reflects the city's unique economic base and development patterns.
Multifamily Properties dominate commercial lending activity in Boston. The city's combination of high rents, low vacancy, strong population growth (2024 saw the largest population gain since the early 2000s), and limited new housing supply creates a compelling investment thesis. Lenders actively compete for well-located Boston multifamily deals, offering favorable terms for stabilized assets and bridge financing for value-add opportunities.
Life Sciences and Lab Space represent a growing share of Boston's commercial lending activity. While the current oversupply has made lenders more selective, properties with committed credit tenancy in established locations like Kendall Square, the Longwood Medical Area, and the Seaport continue to attract strong financing interest.
Mixed-Use Properties are a hallmark of Boston's urban fabric. Buildings combining ground-floor retail with upper-floor residential or office space are common throughout neighborhoods like the South End, Jamaica Plain, and Somerville. These properties offer diversified income streams that lenders find attractive.
Office lending remains active but selective. Lenders strongly prefer Class A assets in Back Bay, the Financial District, and Cambridge with committed long-term tenancy. The office-to-residential conversion trend is creating a new category of lending activity for adaptive reuse projects.
Retail financing has stabilized as consumer spending patterns normalized. Neighborhood retail along Newbury Street, Harvard Square, and Coolidge Corner benefits from strong foot traffic and limited competing supply.
Industrial assets continue to attract strong lender interest given Boston's tight supply and strategic importance as a distribution hub for the New England region.
If you are ready to explore financing for your Boston commercial property, reach out to Clear House Lending to discuss your options with an experienced loan advisor.
Frequently Asked Questions
What is the minimum down payment for a commercial loan in Boston?
The minimum down payment depends on the loan program. SBA 7(a) and SBA 504 loans allow down payments as low as 10% for owner-occupied commercial properties, making them the most accessible option for small business owners. Conventional commercial mortgages typically require 25% to 35% down, while DSCR loans for investment properties generally require 20% to 35%. Boston's high property values mean even a 10% down payment can represent a significant capital commitment, so early equity planning is essential.
How long does it take to close a commercial loan in Boston?
Closing timelines vary by loan type. Conventional commercial mortgages typically close in 45 to 60 days. SBA loans may take 60 to 90 days due to additional government underwriting requirements. Bridge loans and hard money loans can close in as little as 7 to 14 days, which is particularly valuable in Boston's competitive market where multiple offers and tight deadlines are common on well-located properties.
Are commercial loan rates in Boston different from the national average?
Commercial loan interest rates are primarily driven by national capital markets rather than local geography. A stabilized multifamily property in Back Bay will generally receive similar base rates as a comparable asset in Chicago or Dallas. However, Boston's strong institutional demand and low default rates can sometimes result in slightly more competitive spreads for prime assets. Conversely, specialized properties like lab space may carry rate premiums reflecting their unique risk profiles.
Can I finance a life sciences or lab property in Boston right now?
Yes, though lenders are more selective than they were during the 2021 to 2023 lab development boom. The current lab vacancy rate of approximately 36% means underwriters are focused on properties with committed credit tenancy, strong locations near Kendall Square or the Longwood Medical Area, and modern buildout specifications. Properties with 10 to 15 year leases from investment-grade pharmaceutical companies remain highly financeable and attractive to lenders.
What is the best loan type for a first-time commercial investor in Boston?
For first-time investors purchasing owner-occupied property, SBA loans offer the most accessible path with 10% down payments and competitive rates. For investors purchasing rental property, DSCR loans are often the best fit because they qualify based on property income rather than personal income. Use our DSCR calculator to estimate whether your target property meets minimum debt service coverage requirements before making an offer.
Do I need to be a Massachusetts resident to get a commercial loan for Boston property?
No, you do not need to be a Massachusetts resident to obtain commercial financing for a Boston property. Most commercial lenders evaluate the property's income potential, location, condition, and the borrower's overall financial strength rather than state of residence. Out-of-state and international investors regularly finance commercial real estate in Greater Boston, though they may face additional documentation requirements and potentially higher down payment thresholds depending on the lender and loan program.
Take the next step in your Boston commercial real estate journey. Contact Clear House Lending today for a free consultation and rate quote tailored to your specific property and investment strategy.