Greater Boston’s industrial and warehouse markets continue to be plagued by high vacancy rates and alarmingly low rents, although recent sparks — in of all places the decimated Interstate 495 region — could be leading indicators of better times to come.
A new report by Richards Barry Joyce & Partners said the three months ended Sept. 30 marked the second-consecutive quarter of positive absorption within Greater Boston’s industrial real estate market. That uptick followed six straight quarters — a year and half — of negative absorption that pushed vacancy rates deep into the double digits and rents to rock-bottom levels.
Manufacturing space as well as so-called “flex” manufacturing space saw 340,000 square feet of positive absorption in the most-recent quarter. That activity dropped the vacancy rate for traditional manufacturing space to 15.7 percent from 17.1 percent three months earlier. Flex-space vacancies slipped to 18.2 percent, versus 18.8 percent at the end of July, according to RBJ.
Among the reports highlights within the region’s manufacturing markets:
- the Interstate 495 West region (Westborough, parts of Worcester County) reported 295,000 square feet of positive absorption affecting traditional manufacturing space. That trend appeared to go hand-in-hand with the fact that asking rents, at roughly $6 a square foot, are among the lowest in the state.
- the Route 128 belt’s flex manufacturing market reported 195,000 square feet of positive absorption, with most of that occurring in the northern suburbs stretching from Burlington all the way up to Gloucester.
- the flex-manufacturing market’s average asking rent of $7.81 per square foot hit a 10-year low. The 495 market provided the primary drag, posting average rents per square foot in the $6.44-to-$7.59 range.
Greater Boston’s warehouse market saw 76,000 square feet of negative absorption in the most recent quarter, as vacancies ticked up slightly to 17.5 percent. Average rents fell by a few cents to $5.49 per square foot. Among the report’s warehouse-market highlights:
- available space for lease has fallen by 1.1 million square feet since March 30, with the 495 market drawing the most activity. Some 916,000 square feet of positive absorption was credited to the areas surrounding that particular stretch of highway.
- the 495 South market’s vacancy rate topped 42 percent. A big swing occurred when Trader Joe’s vacated a 300,000-square-foot facility in Taunton.
- no new construction projects or developments were completed in the quarter, marking what RBJ said is the sector’s “longest construction drought in 15 years.”
Boston Business Journal