BOSTON — Boston’s industrial real estate market continues to navigate near-term challenges, but improving leasing activity and limited new construction are helping position the sector for a more balanced recovery, according to Marcus & Millichap’s newly released 2026 Boston Industrial Investment Midyear Outlook.
The report forecasts Boston’s industrial vacancy rate will rise to 9.3 percent by the end of 2026, marking the metro’s highest vacancy level since late 2012. Analysts attribute the increase primarily to ongoing net space relinquishment, even as new supply remains relatively constrained compared to historical trends.
Despite elevated vacancy, market fundamentals are beginning to stabilize.
“Boston is still working through some near-term softness, but the market is moving toward better balance,” said Thomas Shihadeh, senior managing director and New England market leader at Marcus & Millichap. “New supply is limited, leasing activity has started to improve from last year’s pace, and the metro’s land constraints continue to support the long-term case for well-located industrial assets.”
The report projects industrial deliveries will total approximately 3 million square feet in 2026, adding just 0.6 percent to existing inventory. That figure remains below Boston’s prior decade annual average of 0.9 percent, reflecting the region’s ongoing development limitations and scarce industrial land availability.
Rental growth is expected to remain modest throughout the year. Average asking rents are forecast to increase slightly to $12.05 per square foot by December, although elevated vacancy levels are likely to continue placing pressure on landlords and limiting stronger rent acceleration.
Industry observers are also watching infrastructure improvements that could strengthen the region’s long-term logistics outlook. The report highlights Massport’s multiyear capital investment program, including planned upgrades at Conley Terminal aimed at improving freight efficiency and supporting future logistics-oriented tenant demand.
According to Shihadeh, investor interest remains strongest for strategically located industrial properties positioned to serve evolving supply chain needs.
“The opportunity is in the right locations and the right product, especially assets that can serve last-mile demand, first-ring suburbs and logistics users that benefit from stronger freight efficiency over time,” he said.
While the market faces ongoing adjustment after years of rapid industrial expansion, the report suggests Boston’s structural advantages — including land scarcity, dense population centers and transportation infrastructure — continue to support the long-term outlook for industrial investment in the region.
