Greater Boston Industrial Market Back on Solid Footing In Third Quarter

BOSTON– Greater Boston’s industrial market posted 37,000 square feet of positive absorption, breaking a two-quarter negative streak and pushing vacancy down to 9.7 percent, according to “indSTATus – Q3 2017,” a research report from Transwestern that highlights warehouse, manufacturing and flex properties.

“While the positive absorption figure was slight, it was still good to see the market rebound,” said Chase Bourdelaise, Managing Director of Research & Analytics at Transwestern. “Market fundamentals remained strong through the two down quarters, as evidenced by the vacancy rate being well-below the five-year average of 12.4 percent.”

WAREHOUSE

• Greater Boston’s warehouse market had 71,000 square feet of positive absorption, pushing vacancy down to 9.2 percent.
• The average asking lease rate for warehouse space rose again, setting a new record of $6.99 per square foot.
• The 4.4 million-square-foot warehouse market in “The Boroughs” remains extremely tight with vacancy at a mere 1.8 percent, 4 percentage points below the five-year average.

MANUFACTURING

• There was slight negative absorption of 34,000 square feet, the second consecutive down quarter, edging vacancy up to 12 percent from 11.8 percent last quarter.
• More than 60 percent of the vacancy total resides in just three buildings, which if removed from the inventory completely would push vacancy down to 4.9 percent.
• Average asking lease rates rose to $8.46 from $8.23 in second quarter.

FLEX

• There was 28,000 square feet of negative absorption in the 27.9-million-square-foot flex market with vacancy remaining steady at 11.1 percent.
• The negative absorption was unusual since flex is one of Greater Boston’s most consistently strong markets, with positive absorption in 11 of the past 14 quarters.
• Since 2012, Greater Boston has absorbed nearly 2.8 million square feet of flex space, pushing vacancy down from 17.6 percent to its current level, its lowest point on record.
• The average asking lease rate rose 19 cents to $10.81 per square foot since last quarter.