Is 128 Industrial Real Estate Going The Way of the White Buffalo?
By Dean Blackey
As Greater Boston’s flex and industrial market remains at historically low vacancy rates, leasing options along Route 128 for conventional industrial tenants are virtually becoming nonexistent.
It doesn’t feel like it was that long ago when conventional flex and warehouse space along 128 was as easy to find as your nearest Dunkin Donuts. I recall getting calls for traditional users who needed say 10 or 20,000sf of warehouse space. I would tell them: “drive up Bear Hill in Waltham and decide what side of the street you want to be on, and I guarantee there will be space available for us to look at”.
Today the landscape is vastly different.
As of this writing, if you need 10,000 square feet of industrial space with at least one loading dock and 16 feet or more of clear height anywhere along Route 128 from Burlington to Canton, there is only one choice. For spaces over 20,000 square feet, there are a whopping three options, and for spaces over 50,000 square feet, there are none.
What’s worse is this imbalance shows no sign of subsiding. While most tend to focus on increased demand created by things like eCommerce and last mile logistics, many don’t realize just how rapidly the supply along the 128 belt has been simply wiped off the map. Unlike other sectors in the market, this imbalance has less to do with the natural ebbs and flows of positive and negative absorption and more to do with the inventory as a whole simply being decommissioned to make room for what developers deem as higher and better, (i.e., more profitable) uses. In fact, it is estimated that one million square feet of industrial space were lost to redevelopment last year in central 128 alone.
Massive Life Science complexes, GMP, and multifamily redevelopment are the main culprits when it comes to this gradual extinction of Industrial space along 128.
Furthermore, there has been little to no replenishment of this supply, putting brick and mortar industrial users who have called 128 home in a bind. It is increasingly common for industrial Tenants coming off long-term leases to experience a rude awakening when their rent doubles or triples, forcing them to relocate to areas they never otherwise would have considered.
It is more important than ever to align yourself with a competent broker who knows their respective market inside and out. I would say 70% of the industrial deals we are doing and not for space that is readily marketed on Costar or LoopNet……more to be added.
Need help with a property? Contact a member of our team today.