September 2024 Boston Industrial Report

The metro Boston industrial and flex asset class remains on balanced footing.

Vacancies did appreciate by approximately 50 basis points (bps) from our June report, and the total vacancy rate market wide presently sits at 7.3%. The YTD absorption print at the issuance of this report is -1,687,384 SF.

The summer months have been marked by a spate of new deliveries across the Commonwealth. In Bellingham, Howland Development completed construction of their 124,200 SF industrial facility – which followed shortly on the heels of their other most recent delivery at 4 Executive Drive in North Andover. In Chelsea, Hines brought 250 Marginal Street to market – a much anticipated, 146,409 SF urban development. Portman Industrial delivered the first building of their Silver City Business Park in Taunton – a 248,453 SF industrial facility. The buildings are all still seeking tenants. Plans call for the speculative industrial park to contain four separate warehouses totaling over 1.1 million SF.

Significant leasing activity was dominated by renewals in recent months. Fenwal-Controls/Kidde-Fenwal, Inc. renewed their 218,000 SF footprint at 400 Main Street in Ashland. At 176 Grove Street in Franklin, RXO Last Mile signed a renewal for 170,000 SF. Nuvera Fuel Cells, the multinational hydrogen fuel cell technology company, also renewed their 111,000 SF U.S. headquarters at 129 Concord in Billerica. Lupoli Companies leased 72,500 SF to their first commercial tenant – Hiper Global. Hiper – an Israeli based computer hardware manufacturer, is shifting their HQ operations from North Andover to King Street Crossing – a 2 million+ SF mixed-use development. While most of the lease is designated for office space, Hiper Global intends to dedicate a portion of their footprint to a newly developed data center.

In updated construction news: sitework is presently underway at Link Logistics’ first foray into the Boston urban market. One of the largest industrial real estate operator (who, in turn, is owned by Blackstone – the worlds largest alternative investment firm) has begun initial ground preparations on Route 1A in Revere. Their two building, 635,000 SF speculative development is being built in two phases, with Building A on track for substantial completion at the end of 2024. Building B is presently forecasted for a Q1 2027 delivery. This new industrial park will add much-needed inventory to the urban market. The city’s industrial inventory has shrunk by nearly 10% over recent years as owners and investors have sought to leverage properties to their highest-and-best use considering the severe housing shortage.

In late August, Integrated Builders and Seefried Industrial Properties announced they have commenced construction on their 600,000 SF distribution center on Theodore Drive in Westminster. This facility is slated to be completely occupied by Home Depot for use as a distribution center. Accounting for the recent deliveries, the current construction pipeline has tapered from this time last year, where Hunneman data in September of 2023 had the current construction pipeline totaling 13.4 million SF across the entire Commonwealth. As it stands today, there is approximately 3.4 million SF currently under construction. Sales activity remains robust, although, total dollar values are down approximately 30% through this same time period of 2023. Jerome Powell and the Federal Reserve initiated a 50 bps cut in the Federal Funds Rate at their latest meeting in September - bringing it to a range between 4.75%-5.00%. The committee is also forecasting through their dot plot an additional 50 basis points of cuts by the end of 2024. While this reduction may not cause an immediate spike in transaction volume, it provides momentum that investors, developers, and businesses have been seeking as they look to model their future acquisition, disposition, and development plans.

For more information please contact:

Mark Fallon, Director of Research & Strategy | mfallon@hunnemanre.com