NAI Hunneman EVP and principal Catherine Minnerly

BOSTON—In a little over a year the northern and southern suburban industrial markets in Boston have absorbed well in excess of 4 million square feet of space, pushing vacancy rates in the two markets to below 10%.

Catherine Minnerly, EVP and principal with NAI Hunneman in Boston, says that after what she described as a “rather rambunctious” end of year 2015, activity in the industrial market in Greater Boston in the first six months of 2016 slowed considerably. However, a turnaround took place in the third quarter as space users tried to get deals signed so that they could take occupancy of space in the first quarter of 2017.

In the first six month of this year, although industrial brokers were “busy scurrying, running around trying to put deals together, they weren't actually getting inked,” she says. “A lot of people were hesitant to sign.”

In the third quarter and into the fourth quarter deals began to close and Minnerly believes that there is a bit of a rush at the year-end to get these transactions completed. She notes that the NAI Hunneman southern suburban Boston industrial team completed nearly 400,000 square feet of industrial transactions since the beginning of the third quarter of this year, including the 218,259-square-foot lease renewal by Home Depot at 625 University Ave. in Norwood.

Other major transactions in the southern suburban Boston industrial market in the third quarter included a 193,000-square-foot lease by Moderna Therapeutics at 100 Upland Drive in Norwood and Amazon.com's 162,499-square-foot lease at 12 Industrial Drive in Milford. NAI Hunneman sets the third quarter South Boston industrial market vacancy rate at 8.6%, down 250 basis points from the same period in 2015 and the average asking rent at $6.34-per-square-foot.

In the past five quarters 2.6 million square feet of industrial space has been absorbed in the southern suburban Boston market. Minnerly says that conditions are ripe for continued positive performance in the industrial sector. She relates that due to market volatility, as well as high construction costs, while there is about 1.6 million in new industrial construction permitted, Minnerly expects few of these projects will break ground in 2017.

With the turnaround in the industrial market comes some M&A activity with some major industrial users that has created volatility and could put some additional large blocks of space back on the market in the southern suburban Boston region. Several recent examples of M&A or consolidation programs that affected the market include Central Garden & Pet, which closed its 350,000-square-foot distribution center at 800 John Quincy Adams in Taunton and relocated operations to the Lehigh Valley in Pennsylvania; Clark Cutler McDermott vacated 59,770 square feet in Franklin and Astrodyne closed a 29,000-square-foot operation in Mansfield.

The northern Boston suburban industrial market has posted four consecutive quarters of positive absorption, totaling nearly 2 million square feet. The region's 9.5% vacancy rate in the third quarter of this year was 280 basis points lower than the same period last year. The average asking rent in the northern Boston suburban industrial market in the third quarter was $9.44-a-square-foot.

The largest lease deal in the third quarter was HighRes Biosolutions' 80,000-square-foot lease at 102 Cherry Hill Drive in Beverly, followed by Unigraphic Inc.'s 70,054-square-foot transaction at 110 Commerce Way in Woburn. Other news of note include Textron Systems decision to downsize its manufacturing and sales operations in Wilmington, which will involve the layoff of 200 employees. In addition, 3D Systems has vacated nearly 60,000 square feet of space at 19 Connector Road in Andover.

NAI Hunneman EVP and principal Catherine Minnerly

BOSTON—In a little over a year the northern and southern suburban industrial markets in Boston have absorbed well in excess of 4 million square feet of space, pushing vacancy rates in the two markets to below 10%.

Catherine Minnerly, EVP and principal with NAI Hunneman in Boston, says that after what she described as a “rather rambunctious” end of year 2015, activity in the industrial market in Greater Boston in the first six months of 2016 slowed considerably. However, a turnaround took place in the third quarter as space users tried to get deals signed so that they could take occupancy of space in the first quarter of 2017.

In the first six month of this year, although industrial brokers were “busy scurrying, running around trying to put deals together, they weren't actually getting inked,” she says. “A lot of people were hesitant to sign.”

In the third quarter and into the fourth quarter deals began to close and Minnerly believes that there is a bit of a rush at the year-end to get these transactions completed. She notes that the NAI Hunneman southern suburban Boston industrial team completed nearly 400,000 square feet of industrial transactions since the beginning of the third quarter of this year, including the 218,259-square-foot lease renewal by Home Depot at 625 University Ave. in Norwood.

Other major transactions in the southern suburban Boston industrial market in the third quarter included a 193,000-square-foot lease by Moderna Therapeutics at 100 Upland Drive in Norwood and Amazon.com's 162,499-square-foot lease at 12 Industrial Drive in Milford. NAI Hunneman sets the third quarter South Boston industrial market vacancy rate at 8.6%, down 250 basis points from the same period in 2015 and the average asking rent at $6.34-per-square-foot.

In the past five quarters 2.6 million square feet of industrial space has been absorbed in the southern suburban Boston market. Minnerly says that conditions are ripe for continued positive performance in the industrial sector. She relates that due to market volatility, as well as high construction costs, while there is about 1.6 million in new industrial construction permitted, Minnerly expects few of these projects will break ground in 2017.

With the turnaround in the industrial market comes some M&A activity with some major industrial users that has created volatility and could put some additional large blocks of space back on the market in the southern suburban Boston region. Several recent examples of M&A or consolidation programs that affected the market include Central Garden & Pet, which closed its 350,000-square-foot distribution center at 800 John Quincy Adams in Taunton and relocated operations to the Lehigh Valley in Pennsylvania; Clark Cutler McDermott vacated 59,770 square feet in Franklin and Astrodyne closed a 29,000-square-foot operation in Mansfield.

The northern Boston suburban industrial market has posted four consecutive quarters of positive absorption, totaling nearly 2 million square feet. The region's 9.5% vacancy rate in the third quarter of this year was 280 basis points lower than the same period last year. The average asking rent in the northern Boston suburban industrial market in the third quarter was $9.44-a-square-foot.

The largest lease deal in the third quarter was HighRes Biosolutions' 80,000-square-foot lease at 102 Cherry Hill Drive in Beverly, followed by Unigraphic Inc.'s 70,054-square-foot transaction at 110 Commerce Way in Woburn. Other news of note include Textron Systems decision to downsize its manufacturing and sales operations in Wilmington, which will involve the layoff of 200 employees. In addition, 3D Systems has vacated nearly 60,000 square feet of space at 19 Connector Road in Andover.

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John Jordan

John Jordan is a veteran journalist with 36 years of print and digital media experience.