First-half net absorption reaches nearly 4 million square feet, vacancy declines to 7.6%, and development pipeline falls to its lowest level since 2020.
BOSTON — Greater Boston’s industrial real estate market continued to strengthen during the second quarter of 2026, with rising tenant demand, declining vacancy, and a sharply slowing development pipeline pointing to a tighter market heading into the second half of the year, according to JLL’s latest Q2 2026 Boston Industrial Outlook.
The report found that the market recorded 2.3 million square feet of net absorption during the second quarter alone—more space than was absorbed during all of 2025. Through the first six months of 2026, net absorption totaled nearly 4 million square feet, marking the strongest first-half performance since 2022.
The continued leasing activity helped reduce overall industrial vacancy by 30 basis points, bringing the vacancy rate down to 7.6 percent.
The strongest gains were seen in the Class A market, where vacancy declined by 320 basis points in a single quarter to 15.2 percent, the lowest level since the fourth quarter of 2023 and the largest quarterly decline since late 2021. JLL attributed the improvement to newly delivered speculative buildings from the past four years steadily securing tenants.
Despite the increase in leasing activity, asking rents remained relatively stable at $15.24 per square foot, triple net (NNN).
Tenant Demand Continues to Climb
According to JLL, active tenant demand has climbed to 19.9 million square feet, representing a 42 percent increase year over year.
The report notes that demand is increasingly concentrated among large industrial users. Currently:
- 15 companies are seeking facilities of 250,000 square feet or larger.
- 39 companies are searching for spaces of 100,000 square feet or more.
At the same time, available inventory capable of accommodating those large users continues to shrink.
Across Greater Boston, JLL identified only 11 buildings currently capable of housing tenants seeking 250,000 square feet or more, suggesting that competition for large distribution and logistics facilities is likely to intensify.
Construction Pipeline Falls to Six-Year Low
While demand has strengthened, new construction has slowed considerably.
Only 1.8 million square feet of industrial space is currently under construction across Greater Boston—the smallest development pipeline since the third quarter of 2020.
Groundbreakings were particularly limited during the second quarter, totaling only 110,000 square feet. Although JLL expects several speculative projects to begin construction later this year, developers have remained cautious following several years of elevated deliveries.
The report projects that only 265,000 square feet of speculative industrial space will be completed during the remainder of 2026, significantly limiting new supply entering the market.
Most New Deliveries Were Build-to-Suit Projects
Industrial deliveries totaled 1.7 million square feet during the quarter.
Much of that activity came from Target’s new 1.4-million-square-foot distribution center in Hudson, New Hampshire. Overall, 97 percent of all space delivered during the quarter consisted of build-to-suit (BTS) projects developed for specific users rather than speculative construction.
Leasing Activity Remains Strong
Industrial leasing volume reached 2.1 million square feet during the second quarter.
Approximately 1.35 million square feet, or 64 percent, represented net new leases, reflecting continued expansion by industrial occupiers rather than renewals or relocations.
Among the quarter’s largest transactions were:
- Maersk, which leased 616,000 square feet at 75 Plain Street in Hopedale.
- Can One, which expanded into 216,000 square feet at 50 Robert Milligan Parkway in Merrimack, New Hampshire.
- SEKO Logistics, which signed a 105,000-square-foot lease at 530 John Hancock Road in Taunton.
For the first half of 2026, 64 percent of all leasing activity consisted of new leases, compared with 47 percent during the same period in 2025.
Outlook for the Second Half of 2026
JLL expects industrial space across Greater Boston to become increasingly constrained during the remainder of the year as tenant demand continues to outpace new supply.
With only 265,000 square feet of speculative space expected to be delivered before year-end and 60 percent of active demand coming from tenants seeking buildings of 250,000 square feet or more, the firm expects large-block vacancy—a key driver of higher vacancy over the past several years—to continue declining.
The report suggests the market is entering a new phase following several years in which substantial speculative development temporarily increased vacancy. As recently completed buildings continue to lease and new construction remains limited, available industrial inventory is expected to tighten further if current demand persists.
JLL’s findings indicate that Greater Boston’s industrial sector has entered the second half of 2026 with stronger leasing momentum, declining vacancy, and one of the most constrained development pipelines seen in recent years, positioning the market for continued tightening if occupier demand remains at current levels.
