The Greater Boston industrial market faced a challenging first half of 2024 in the wake of new deliveries, space givebacks, and business closures.
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).
For more information please contact:
Mark Fallon, Director of Research & Strategy | mfallon@hunnemanre.com