2024 Mid-Year Boston Industrial Report
The Greater Boston industrial market faced a challenging first half of 2024 in the wake of new deliveries, space givebacks, and business closures.
Leasing activity was muted – the majority of large block (100,000 SF+) leases were renewals, led by Aspen Technology renewing and expanding to 155,000 SF at 22 Crosby Drive in Bedford, and MGX Beverage Group renewing their 127,000 SF footprint at 305 Forbes Boulevard in Mansfield. Notable new leases above 100,000 SF include: Persimmon Technologies, who took 140,000 SF at 35 Crosby Drive in Bedford and Quality Custom Distribution inked a new deal for 135,000 SF at 300 Charles F. Colton Road in Taunton. In Wilmington, Zoll Medical occupied the entire 111,000 SF building at 38 Upton Drive.
A difficult financing environment, coupled with a dramatic increase in supply and slightly reduced demand has hampered transaction volume through the first half of 2024. Sales for industrial and flex product have decreased approximately 37% from this same period in 2023 in nominal dollars, and 20% on a total square foot basis. However, price per square foot has remained mostly stable, indicating that despite swirling macroeconomic concerns, appetite for this product remains generally bullish on the long-term time horizon. As further evidence of investor conviction in this asset class, Wakefield based NorthBridge Partners just closed their latest fund – significantly oversubscribed. NorthBridge is a real estate investment firm focused on logistic industrial real estate assets with $2.3B AUM. Their latest offering, “Fund IV” raised $948MM – $150 million more than their initial $800MM target. Furthermore, Fund IV raised 46% more than Fund III, which closed in 2021, and an astounding 731% more than the Fund II – closed in 2019.
A slowdown in leasing velocity and sale volume notwithstanding, the asset class remains on solid ground in the face of an otherwise constrained commercial real estate environment. The first half of 2024 saw the total vacancy rate across all markets rise approximately 100 basis points from the end of 2023. This expansion was led predominately by the suburban markets, namely 495 South and 128 West. Ambri, a Marlborough based technology firm filed a WARN notice back in September – and the entire 141,000 SF recently renovated flex building at 196 E Main Street in Milford hit the market in February. At 50 John Hancock Road in Taunton, logistics company USPack offered 83,000 SF up for sublease – less than a year after committing to the space in July of 2023. In Waltham on 62 Fourth Avenue, Vicarious Surgical, a robotics company operating in the medical space, put the entire 30,000 SF flex building up for sublease. A notable addition to the market, given they executed a long-term lease for this property back in October 2021, as part of a campus expansion plan (62 Fourth Avenue is directly adjacent to their headquarters facility on 78 Fourth Avenue).
There were several recent updates in construction, deliveries, and financing. Physik Instrumente broke ground on their 120,000 SF manufacturing space, marking the start of a move from their three preexisting facilities in New England. This relocation reflects not only a consolidation of their existing space, but also an approximate 300% expansion from their current footprint, with the company intending to add 100 additional jobs. In Bedford, 44 Middlesex Turnpike completed construction on Building II – a 147,000 SF purpose-built life science manufacturing campus. The building was delivered vacant and plans for the second building of the two-building campus have been delayed until tenancy can be secured. In Peabody, Oliver Street Capital & Bain Capital Real Estate closed a $52,750,000 loan, which replaced the acquisition debt from their 2020 purchase of 140 Summit Street in Peabody. The financing will enable them to effectuate their 83,000 SF expansion plan on the 370,000 SF industrial asset. In Grafton, Boston based GFI Partners closed on a 33-acre site held by Mass Development, the former site of Grafton State Hospital. GFI Partners intends to construct a two building, 200,000 SF industrial campus with work set to begin this summer.
For more information please contact:
Mark Fallon, Director of Research & Strategy | mfallon@hunnemanre.com
