2024 Year-End Boston Industrial Report
Industrial and flex assets in Greater Boston closed out 2024 on a strong note, led by several significant lease extensions and renewals.
Vacancy ended the year at 8.1%, reflecting a 300 basis point increase from year-end 2023, and YTD absorption registered at -1,948,721 SF.
The final quarter was marked by a relative dry spell in new construction groundbreakings – although several new proposals and approvals came late in the year, offering an interesting insight into the future of new developments in the Commonwealth. The most notable: a $3 billion dollar data center development spearheaded by Servistar and Westmass Area Development Corp is set to be constructed in Westfield. The project in its current form calls for 10 data center buildings totaling nearly 2.7 million SF, with construction set to begin in early 2026. This is a fascinating development in Massachusetts, given that the state has been overlooked in the data center building craze – mostly as a function of electric utility pricing (which the Commonwealth ranks in the top 5), and real estate costs. The development was aided by the Legislative Branch’s latest measure to exempt data centers from the sales and use tax, which is intended to encourage further development in this space. In other high demand, low inventory development news: Freezpak is set to begin construction of a 203,000 SF cold storage facility on Innovation Way in Fall River. They acquired the 16-acre lot from VMD Companies in early October. Both data centers and cold storage facilities are niche categories of the industrial asset class that have ever increasing demand and severely constrained supply in the Commonwealth.
Elsewhere, it would appear that developers have begun to capitalize on increased demand for smaller facilities – 38 Riverside Drive in Pembroke delivered their 45,000 SF flex building in late November. On Upper Union Street in Franklin – Fraser Engineering took occupancy of half of a newly delivered 42,750 flex asset. In Rowley on Forest Ridge Drive, construction is nearing completion of 36,000 SF of small bay contractor facilities. 40 Commerce Way in Tewksbury delivered in early Q4 – a Rhino Capital and Ridge Real Estate Partners development – also firmly in the smaller segment at just shy of 65,000 SF. 206 Mechanic Street – a Marcus Partners and Howland Development collaboration - arrived in early September, boasting 36’ clear heights and 124,000 SF of distribution and warehouse space. Further in this report details the stark disparity between smaller industrial assets and large, big box properties that until very recently have dominated the new construction pipeline.
Leasing activity this quarter was led by Sappi North America, a paper product supplier: they extended their commitment at 66 Saratoga Boulevard in Ayer for 262,000 SF. Lindenmeyr Munroe also executed a renewal for 170,775 SF on Mechanic Street in Bellingham. Their new agreement offers a starting rental rate that is twice that of the initial lease agreement signed in 2010 – a testament to the ever-expanding rents in the industrial and flex asset classes. Other significant leasing activity included a 110,000 SF, short term renewal by Wayfair at 19 Leonard Street in Norton. Amazon was active this quarter: they signed a 112,600 SF extension at 201 Beacham St in Everett, and also extended their 81,000 SF commitment at 428 Main Street in Hudson in a deal brokered by Hunneman. On Executive Drive in Andover, Howland Development secured their first tenant at their newly delivered 207,000 SF industrial asset. Red Thread, a furniture vendor, is set to take nearly 96,000 SF for ten years at the site.
Total sales volume across both asset classes proved to be relatively static in 2024, approximately 2% lower than 2023. Both years showed just south of $2 billion – which is a long way from the blockbuster sales years of 2020-2022, but actually is quite representative of the historical sales volume pre-covid. On a per square foot basis, transactions edged down slightly from 2023. Owner/Users remain some of the most active purchasers – accounting for nearly 20% of all purchase volume this year - one of the highest in recent history for this buyer profile.
For more information please contact:
Mark Fallon, Director of Research & Strategy | mfallon@hunnemanre.com
