Despite Headwinds in the Economy the Boston Industrial CRE Market Remains Robust
Notwithstanding inflationary pressures, the Ukrainian war, on-going supply-chain issues, rapidly rising construction costs, and labor shortages, the Greater Boston industrial marketplace continues to display tremendous resiliency as strong leasing activity caused net absorption to remain positive for the 17th straight quarter. Year over year, 3 million square feet have been delivered to the market, while 3.6 million square feet have been absorbed. The vacancy rate in the combined flex, manufacturing, and industrial sector equates to 3.9% and rents have grown on average a staggering 12.2% since the second quarter of 2021. The flight-to-quality in the industrial arena continues as a market trend with overall warehouse/distribution vacancies and Class A warehouse/distribution vacancies declining to historic lows of 2.1% and 1.4%, respectively. Continued strong demand for industrial investment properties has pushed the average price to a stunning $245 per square foot. As the second half of 2022 commences, no near term disruption scenarios seem viable with respect to Boston’s 354,911,194 square foot industrial market. With the overall economy fully recovered from the pandemic, industry-specific labor momentum in Boston’s industrial sector continues to remain strong as industrial employment has specifically risen at an annual average rate of 1.1% over the last several years. Overall, industrial employment constitutes approximately 290,000 of the metro’s 2.7 million jobs. Notable lease transactions in the second quarter include McKesson (260,000 SF at 55 Lyman St, Northboro), List Logistics (105,000 SF at 90 Salem Rd, Billerica), Wayfair (88,000 SF at 20 Constitution Dr, Taunton), and Sacks Exhibits (88,000 SF at 76 Holton St, Woburn). The phrase “make hay while the sun shines” continues to apply to a red-hot industrial real-estate marketplace. Any abatement in this sector does not appear to be on the horizon
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We combine suburban Boston expertise in the industrial, flex and office property markets with direct senior management involvement with clients and properties to produce unparalleled results for clients locally, regionally, nationally and internationally through our affiliation with CORFAC International, a top five global network of entrepreneurial commercial real estate services firms.
