- Industrial continues to attract attention from investors as a proven stable asset class.
- Both build-to-suit and speculative construction are underway across the state, expanding market boundaries.
- Industrial fundamentals have held strong, with consistently low vacancies and mid-$10/square-foot aggregate rental rates.
- Life science users and developers are active, making cGMP a best-use option alongside high-bay logistics plays.
Industrial has become a juggernaut in Greater Boston real estate, posting consistently strong performances quarter after quarter and carrying that momentum through the first half of 2021. Abundant leasing throughout the region led to another quarter of positive absorption, of 1.2 million square feet in Q2. Vacancy rates have yet to find their floor, hitting a new low of 7.4% in Q2 for the market aggregate. Average rental rates moved into the mid-$10-per-square-foot range in the second quarter, an increase over Q1. Most leasing is in new construction or newly renovated product. High-bay and cGMP spaces continue to dominate the market, with the highest asking rents, fast lease-up, and stiff competition for space.
The ever-dropping vacancy rate speaks to the high demand in the Boston industrial market. Existing space is scarce, and new construction has attracted strong demand, even as developers push market boundaries by seeking new land sites in the western reaches of Worcester County. The usual suspects of logistics and e-commerce remain demand drivers, joined by the manufacturing component of the life science industry within the 495 belt. Both land sites and conversion plays are intensely sought-after, as industrial has become a best-use option in recent quarters.