Greater Boston Industrial Real Estate Market Posts Strong Close to 2016

BOSTON–Greater Boston’s industrial real estate market had a strong close to 2016, with warehouse properties posting the 18th consecutive quarter of positive absorption. The market overview was released in “indSTATus – Q4 2016,” a research report from Transwestern that highlights warehouse, manufacturing and flex properties, all of which posted positive absorption for the quarter.

“The industrial real estate market is on a very strong run, with all three property types covered by our report posting positive results for fourth quarter and the entire year,” said Northeast Research Director Chase Bourdelaise. “The fourth quarter had several key move-ins that helped sustain the healthy market fundamentals. We expect to see a similar level of activity in 2017 to maintain the momentum.”

WAREHOUSE

• Vacancy edged up slightly to 8.8 percent, from the previous quarter’s record-low 8.7 percent.
• The market had 147,000 square feet absorbed in fourth quarter and 1.5 million square feet during 2016.
• Average asking lease rates held steady at $6.05 per square foot.
• The market is on an 18-quarter streak of positive absorption.

MANUFACTURING

• Vacancy was steady, dropping to 12 percent from the previous quarter’s 12.1 percent.
• The market had 8,000 square feet of positive absorption, advancing its streak to three quarters.
• Average asking lease rates rose to $8.26 from $7.86, regaining the mid-$8 mark that was seen at the beginning of 2016.
• Since the start of 2016, the Route 128 West vacancy rate plummeted from 9.6 percent to 1.4 percent.

FLEX

• The market hit its lowest vacancy rate on record, dropping to 11.3 percent from last quarter’s 11.5 percent.
• There was 77,000 square feet of positive absorption for fourth quarter – more than double the previous quarter’s 35,000 square feet – and 653,000 square feet for the year.
• The average asking lease rate of $10.34 per square foot, while down from $10.43 last quarter, is the second highest on record.
• Flex properties are on a five-quarter streak of positive absorption and have been positive for 18 of the past 20 quarters, aggregating 2.7 million square feet of absorption during that period.