Greater Boston 2024 Outlook: Industrial Real Estate Users
Greater Boston 2024 Outlook: Industrial Real Estate Users
By Mike Ogasapian
The Greater Boston Industrial Market can be summed up in one word: tight. Overall vacancy stands on paper at 5%, but that number practically dwindles down to 1% based on a user’s needs of a specific size and geographical location. As a result, asking rents are notably elevated, averaging nearly $15 per square foot on a Triple Net Lease (NNN) basis.
RWH is currently tracking over 7.1MM square feet of new construction of industrial product that will come online in 2024. While this news is exciting and certainly needed for long-term stability in the market, the question remains as to what type of demand will be satisfied. While new industrial construction is aimed toward users over 80,000 SF, the reality is that the largest area of demand is between 5,000 to 30,000 SF.
Users over 80,000 SF will find new opportunities for 1st generation space with superior clear heights (28’+ clear), multiple loading docks, and building aprons with egress to allow 53’ trucks easy access. Unfortunately, users below the 80K SF threshold will have the greatest challenge in satisfying their requirements as they can expect to experience the current supply dilemma for the foreseeable future.
As of right now, rents appear to have topped out across all Greater Boston submarkets for space between 10,000 and 30,000 SF. While low supply and high demand have created a high-rent market, the time to lease has increased on average from about 7 months in 2018 to about 12 months now in 2023. This is a symptom of a market that has a consistent demand but has become difficult to transact due to pricing. A user in a select submarket of this size can expect options to be limited when touring.
For larger users (30K SF +), new generation space will be coming online that will bolster supply and provide options, creating some competition on lease rates. It should be noted however that time to lease has not spiked as it has on the lower end of size, remaining at a steady 6 to 7 month interval before a large block is spoken for. While large users will have more options to tour than in previous periods, underlying demand is still high and may not mean a softening in rental rates.
In a historically tight market, it helps to work with an advisor who understands the data and economic fundamentals of the market. We specialize in assisting users to assess the market, identify opportunities, and secure terms that reflect the market today and where it is going.
To ensure you secure the right space for your needs, read our post on steps to prepare.