Boston— The Boston industrial market experienced robust leasing activity as e-commerce and third-party logistics companies established or expanded their operations throughout the region, according to CBRE’s Q3 2021 Boston Industrial Figures.
As a result, the Greater Boston market posted a sub 2.0% vacancy rate for the first time ever. The nearly 3.2 million sq. ft. of positive absorption recorded in Q3—and just under six million sq. ft. year-to-date—marks Greater Boston’s position as one of the leading industrial markets in the nation.
“Greater Boston is one of the hottest industrial markets in the country with an insatiable demand for space and an extreme shortage of available space,” said Rachel Marks, Industrial Market Practice Leader for CBRE’s Greater Boston region. “Vacancy rates, asking rents, and absorption numbers in the industrial sector have hit record levels that in most cases we are seeing for the first time in history. We expect the level of demand to continue unabated, putting further stress on an already fragile supply/demand imbalance, with just 1.4 million sq. ft. of spec construction currently underway.”
As a result of strong leasing and rapidly diminishing space opportunities, asking rents climbed by 10% from the second quarter and 15% year-over-year to close Q3 at $11.58 per sq. ft. Moreover, the availability rate dropped by a significant 100 basis points (bps) quarter-over-quarter to 3.7%, while the vacancy rate dropped by 60 bps to 1.9%.
Greater Boston’s urban submarket posted 81,978 sq. ft. of positive absorption in Q3, while both availability and vacancy rates dropped to 4.5% and 2.7%, respectively. The North submarket was also active during the third quarter with one of the most notable deals, a 90,000 sq. ft. renewal in Haverhill. Boston’s North submarket posted 137,391 sq. ft. in positive absorption and its vacancy rate dropped by 20 bps to 2.2%.
Greater Boston’s Metro South and Metro West submarkets once again recorded robust growth. Metro South posted more than 1.8 million sq. ft. of positive absorption during the third quarter. As a result, the submarket’s vacancy rate dropped by a whopping 80 bps to 1.8% while its availability decreased 140 bps to 3.6%. The largest lease in Metro South was TriMark USA’s 345,000 sq. ft. commitment for Barings and Lincoln Property Company’s newly constructed high-bay building at 160 Mechanic Street in Bellingham.
Similarly, the Metro West submarket saw more than 1.1 million sq. ft. of positive absorption. The submarket’s availability rate dropped 200 bps to 2.8% and its vacancy rate decreased by 90 bps to just 1.2%. The largest lease in the market was signed by Metrie Inc., which committed to a 122,000 sq. ft. renewal and expansion at 301 Bartlett Street.
