Amid the Pandemic, Suburban Boston Industrial and Flex Market Remains Strong
As the pandemic continues to wreak havoc on the economy, it’s no secret that office demand in greater Boston is dwindling. As a result of these changes, sublease space is becoming increasingly available. However, this same stagnation isn’t present in all markets and industries; the industrial and flex markets continue to be extremely strong. In fact, some areas have seen a decrease in available inventory with a growth in demand over the past six months.
Staying the Course
There are several components of the industrial and flex markets’ strength during this challenging period. While some industries have been entirely put on hold due to the coronavirus pandemic, there is a mix of essential industrial and research and development businesses that have remained operational. They’ve seen an increase in their product demand, therefore necessitating additional production space. Some examples include Locus Robotics, a warehouse automation company, which expanded its footprint by 20,000 square feet at 500 Research Drive in Wilmington, and Exergen Corporation, a scanning thermometer manufacturer, which expanded its space by 60,000 square feet into an industrial building at 126 Merrimack Street in Methuen. There have also been some manufacturing facilities that managed to remain operational during the pandemic by pivoting their business models and working to produce items that are relevant right now.
There’s also been an influx of outward expansion by lab and life science industries seeking cheaper alternatives to Cambridge, where rents are still sky-high. CRISPR Therapeutics left Cambridge for a seven-story lab building in South Boston, while also signing a 43,000-square-foot lease for a cell manufacturing facility in Framingham. Meanwhile, Abcam is exiting Cambridge for 152 Grove Street in Waltham, where they signed a 100,000-square-foot lease.
Lack of Balance
A lack of new inventory is unable to keep up with high demand. In the last ten years, there has been very little new or upgraded industrial and flex inventory built on spec. However, there are some success stories. Carlisle Capital raised the roof at 110 Fordham Road from an older, 14’ clear height to 30’ clear height, and Amazon signed a lease for the entire building. Meanwhile, Amazon continues to lease up large blocks of space for their distribution centers all around the greater Boston area. These include 800,000 square feet at the former Necco Candy Factory in Revere, 3.6 million square feet at 1600 Osgood Street in North Andover, and 100,000 square feet at 110 Fordham Road in Wilmington.
As long as the overall inventory remains the same and the demand continues to climb, it’s safe to say we will continue to see rents increase throughout the suburban industrial and flex markets. While it's a challenging period for the commercial real estate industry to navigate, Cresa’s experienced team is here to help tenants evaluate their options throughout the COVID-19 pandemic and beyond.