New Construction Reaches All-Time High for Greater Boston’s Industrial & Warehouse MarketsJanuary 11, 2018 - By The Real Reporter
BOSTON—Perry Research recently released its Steel report for 2017. The research details vacancy patterns, absorption streaks, and industry trends that have altered the demand for warehouse and industrial property in the Greater Boston real estate market. Overall, industrial property sites experienced positive absorption as vacancy levels reached a successive 15-year low at 6.6 percent and rent levels remained stagnant.
The influx of biopharmaceutical groups like Integra LifeSciences promoted the rising absorption levels. Meanwhile, this trend of medical and biotech firms moving into Greater Boston’s industrial real estate space gave landlords with quality properties more pricing power. This advantage motivated new construction projects, as owners saw the need to give these outdated warehouses more modern amenities. This year even marked a 20-year high for construction levels, with 528,000 sf of new development in the works, values the area has not seen since the 1990s.
The region’s new construction also stems from the booming e-commerce market. Companies now have much faster turn-arounds for shipping consumer goods, requiring state-of-the-art warehouse facilities with close proximities to population centers. Most of the new construction contracts also come from biopharmaceutical companies that already have research bases in the Greater Boston region.
During this last quarter, vacancy for warehouse space dipped to 7.0 percent overall, while 24 Corridor held the most available properties for lease. The most significant changes within the market include the movement of Integra Lifesciences to 106,000-sf in Mansfield, the 50,000-sf expansion of California Paint in Andover, DN Van Lines’ move to Northborough, and the Mayo Clinic’s departure from 29,000-sf in Andover. Metropolitan Pipe & Supply decided to leave its Cambridge facility for more space at 180 New Boston Street in Woburn. Meanwhile, the industrial sector also experienced lower vacancy rates while Thyssenkrupp’s move to 32,000-sf in Holliston and Compass Group’s recent occupancy of 10,000 sf in Southborough represented some of the quarter’s major changes. Similarly, firms like Krohne have started moving into 55 Cherry Hill Drive in Beverly upon its completion this year. The market’s eight-building, 1.1 million sf construction project has been completely pre-leased.
Ultimately, while 2017 values stayed in line with the most recent trends in terms of absorption, vacancy, and rent levels, the growing demand for warehouse and industrial space sparked by the booming e-commerce market and influx of biotech firms continues to change the market and remind us of trends we have not seen since the 1990s. The multitude of new construction projects poses more possibilities for market expansion in 2018. VIEW FULL REPORT HERE.