BOSTON—Greater Boston industrial vacancies are rising as new spec buildings struggle to fill space, according to the second quarter report from Colliers.
Here are key highlights from the Colliers’ report:
- Industrial vacancies rose to 8.3% during the second quarter and have now risen in three consecutive periods. However, that is still about four percentage points better than the historical average, and the increased availabilities are disproportionately concentrated in new distribution buildings, a segment of the market that has more than 10 million square feet available for the first time since 2017.
- More than 11 million square feet of industrial space, most of it preleased, remains under construction. As these buildings deliver, new speculative projects are unlikely to quickly replace them in the pipeline.
- An overwhelming majority of active tenants in the market are seeking blocks under 150,000 square feet.
- Oversupply is the biggest obstacle for industrial fundamentals in the near term. The number of large space requirements is less than it was several quarters back, which has challenged owners trying to fill new buildings.
- Whereas 100% of the space in 2020–21-vintage assets is occupied, in completed 2022–23 buildings only about half is.
- Rising vacancies and increased competition for tenants could dampen rent growth prospects in the distribution sector.
- Some industrial owners are finding fertile ground in emerging/advanced technology firms. Capitalizing on the Boston market’s well-educated workforce and access to capital, industries such as cleantech, robotics, batteries, 3D printing, and energy are gaining traction locally and affecting industrial market leasing.