BOSTON– Greater Boston’s industrial market posted a second negative quarter, with 244,000 square feet of negative absorption caused primarily by a single, 484,000-square-foot warehouse departure.
Without that move-out, the market would have had 239,000 square feet of positive absorption. Overall, the market fundamentals remain strong, with a 9.8 percent vacancy rate, according to “indSTATus – Q2 2017,” a report from Transwestern Consulting Group (TCG) that highlights warehouse, manufacturing and flex properties.
“While we try to avoid special caveats in our reporting, we don’t usually see a single transaction have such a dramatic effect on the entire market,” said Chase Bourdelaise, TCG Managing Director of Research and Analytics. “The size of this departure and the significant swing from positive to negative absorption that it caused is notable. More importantly, looking at the broader picture, the market still looks strong and appears to be ready to get back on track.”
- Greater Boston’s warehouse market experienced 171,000 square feet of negative absorption, pushing vacancy up slightly to 9.1 percent.
- Most of the negative absorption was due to Martignetti Companies’ departure from 484,000 square feet at 175 Campanelli Drive in Braintree.
- Excluding the Martignetti departure, warehouse absorption jumps to positive 313,000 square feet while vacancy drops to 8.3 percent.
- The average asking rent for warehouse space continues to climb, now $6.18 per square foot, its highest price on record.
- Notable TCG transactions include representing New York Life Insurance Co. in an 85,000-square foot lease renewal with Crown Cork & Seal at 14 Aegean Drive in Methuen and representing Sabre Management in a 62,000-square-foot renewal at 485 Wildwood Ave. in Woburn.
- The region’s manufacturing market had its first down quarter in a year, with 74,000 square feet of negative absorption.
- Vacancy increased slightly to 11.8 percent from first quarter’s 11.3 percent.
- Average asking lease rates dropped to $8.23 per square foot, from first quarter’s $8.38 per square foot.
- For the second consecutive quarter, all three submarkets along Route 128 experienced positive absorption, dropping vacancy to 7.0 percent.
- In Route 128 West, the 628,000-square-foot market is currently 1.0 percent vacant.
- The flex market extended its positive streak to seven quarters, with 110,000 square feet positively absorbed in second quarter, making 1.1 million square feet during the stretch.
- The vacancy rate for flex properties hit its lowest point on record, at 11.1 percent.
- The average asking lease rate edged up 26 cents to $10.62 per square foot.
- All three Route 128 submarkets had positive absorption, with Route 128 North notching its sixth consecutive positive quarter, absorbing 357,000 square feet during that time.
- Notable TCG transactions include representing Calare Properties in a 20,000-square-foot lease with VJ Electronix at 19 Alpha Road in Chelmsford.