2025 Year-End Boston Industrial Report
The Greater Boston Vacancy in the metropolitan Boston industrial market expanded 150 basis points this year.
The 9.5% vacancy rate represents a relative high-water mark in the past ten years.
The last time the Commonwealth’s industrial and flex market reported these numbers were the years during and immediately following the Great Financial Crisis. As has been the narrative for the past several quarters, a significant portion of these vacancies are attributable to the vast uptick in new supply. More than half of the product delivered since 2019 has an RBA of over 100,000 SF, and that newly-delivered, large-block product holds a vacancy rate of 29.0%. Of the industrial product that predates 2019, and is smaller than 100,000 SF, vacancy tightens considerably to 6.3%.
The above vacancy expansion aside, the industrial and flex market appears relatively robust. Traditional retail, food and beverage, and 3PL/distribution firms represent over 4 million SF of actively touring tenant demand. This demand, coupled with the dramatically reduced construction pipeline, offers a launching platform for these new deliveries to benefit from much-needed absorption.
The largest deals to close out Q4 were renewals, predictably. National DCP, the supply chain management company behind Dunkin’ franchisees renewed for 252,000 SF at 150 Depot Street in Bellingham. In Leominster, F&M Tool & Plastic, who were recently part of a bolt-on acquisition by GSC Technologies Inc. in June, renewed their 230,000 SF footprint at 175 Pioneer Drive, despite the new ownership. Details on notable lease transactions this quarter and throughout the year are available further in this report.
Sales activity ended the year flat, reporting just under $2 billion in total volume, just barely under 2024’s number. While this figure pales in comparison to recent years – for instance, between 2018 and 2023, total sales volume averaged $3.75 billion per year – that ~$2 billion figure represents a relative return to normal.
In fact, it should be looked upon positively that despite industrial’s relative super cycle in recent years: where demand, asking rents, and development all skyrocketed – that this return to baseline is a relative soft landing. If you were to compare this cycle to another previous darling – lab space, perhaps – that also experienced a dramatic increase in development, asking rents, and demand – it would appear to most landlords and between investors that this is a most welcome base case versus the 25%+ vacancy rate with which the life science
market is contending.
Data Center Update: The amount of development and discussion surrounding data centers has become astronomical. Per the Census Bureau, spending on data center construction is projected to surpass that of office construction in 2026. It has been a contentious issue in the Commonwealth – given Massachusetts’ land and utility prices are some of the highest in the nation, AI-driven construction has mostly skipped over the state. However, in late 2024, Servistar and Westmass Area Development Corp announced that a $3 billion data center would be coming to Westfield, spurred by the Legislative Branch’s latest measure to exempt data centers from sales & use taxes. Reporting by Jonathan Gerhardson, a journalist based in Western Massachusetts, shows Servistar’s development plans have all but fallen apart. His report indicates a variety of curious actions by the company: Servistar’s LLC was administratively dissolved by the State for failure to file annual reports and they failed to file for permitting from the EPA. Reportedly, the developers have not been in contact with Westfield since 2021.
Notwithstanding the events above, data center power player Markley Group is surging forward in Lowell. Markley currently operates the largest data center in the Commonwealth in the former Macy’s building at 1 Summer Street. They also have been rapidly expanding their presence at 1 Markley Way in Lowell. In 2024, the Lowell Planning Board approved Markley’s request to build four additional generators and nine modular chiller plants on the existing site. Furthermore, in December, Markley just acquired the Bolt Assemblage in Lowell via auction – 231,000 SF of industrial product across two buildings. Couple this information with NVIDIA’s announcement earlier this year of their intention to build a data center in this state, it offers insight into what may be a compelling partnership between the largest data center operator in the Commonwealth and the most valuable company in the world.
For more information please contact:
Mark Fallon, Director of Research & Strategy | mfallon@hunnemanre.com
