WAYLAND, MA — R.W. Holmes released its first quarter industrial market report, saying the industrial vacancy in the 495 South submarket has hit a historic low in 2022.
“For the first time ever, 495 South industrial market has hit 2.5% vacancy,” says John Eysenbach, Executive Vice President at R.W. Holmes. “This has caused a decrease in deals completed in Q1, not because of a slow-down in demand, but because there is physically nowhere for companies to go.”
Here are some other highlights from the report:
· It’s no shock that the industrial market has been one of the darling asset classes throughout the pandemic. However, while finding space and acquisition opportunities was difficult in 2021, Q1 2022 numbers indicate more difficulties for tenants and owners for the remainder of 2022.
· Users have resorted to looking outside Massachusetts to neighboring Connecticut, Rhode Island, and New Hampshire markets. In many cases, these subsidiary markets are seeing similar supply constraints, and pricing is now almost equivalent to Massachusetts.
· While many sites are under permit or about to begin construction, there is little supply available for immediate occupancy within the next 6-12 months across all user sizes. Notably, users under 25,000 SF are being significantly impacted by the lack of supply, with very few of the industrial projects under construction tailoring to these smaller users.
· The sales market has similarly been impacted. Sales volume is down almost 50% compared to activity in Q1 2021 across Greater Boston. The limited supply has caused sale prices to continue to rise, each quarter bringing a new high watermark. 495 South has hit $200/SF, Rt 128 North has exceeded $300/SF, and Rt 128 South has seen several deals over $250/SF.
“Throughout Greater Boston, tenants with upcoming renewals face a dramatic change in rental rates from what they currently pay in rent. In some cases, we see rates double,” said R.W. Holmes President Garry Holmes. “The North 128 and Rt 3 market has seen significant rent growth, with deals now getting signed at or near $20 NNN for high bay warehouse product. In 2019, those rates averaged $10 NNN.”