January 21, 2014

Devens leads spike in warehouse occupancy

Quiet Logistics' lease of this 184,000 square-foot warehouse and distribution facility on Barnum Road in Devens contributed to the region's leading performance in warehouse occupancy growth in the fourth quarter of 2013, according to TranswesternRBJ.

Since the Great Recession of 2009, business tenants in Greater Boston, including MetroWest towns along Interstate 495, have enjoyed low commercial rents and the upper-hand in negotiations with landlords. But is that starting to change?

It's highly possible, according to data released this month in indSTATus, the industrial real estate market publication by TranswesternRBJ, the Boston-based commercial real estate firm that services clients between Boston and the 495 corridor.

Greatest Gains Found In 495 North

The winter 2014 study found that asking rents in the industrial market are beginning to climb north of pre-recession levels. And while higher occupancy rates were found across all submarkets —warehouse, manufacturing and flex space —the greatest gains were found in the warehousing market in the 495 North region, which includes the towns of Acton, Ayer, Boxborough, Chelmsford, Devens, Littleton and Westford.

The 495 North region saw warehouse occupancy grow 12.9 percent in the fourth quarter of 2013. Meanwhile, asking rents in the region increased 5.9 percent to $6.03 per square foot.. That's well above the average Greater Boston warehouse market increase of 2.1 percent.

Devens Pushes 495 North Market Ahead

James Lipscomb, a partner at TranswesterRBJ who focuses on the western and northern suburbs, said recent activity in Devens has pushed the 495 North warehouse market ahead of neighboring regions. One notable transaction was Quiet Logistic's lease of 184,000 square feet of warehouse and distribution space at 235 Barnum Road in October. The company, which helps e-commerce companies fill orders using robotics technology, already had operations in Devens and chose to expand there to accommodate growth.

Meanwhile, Chelmsford-based WNA, which manufactures dinnerware, cutlery and packaging, signed a lease Nov. 1 for 51,000 square feet of industrial space at 50 Independence Drive. The WNA lease, signed in November, fills out the 234,287-square-foot building. The commercial real estate firm Jones Lang LaSalle brokered both deals.

Also in November, Clinton-based precision-injection molding manufacturer Nypro announced it would expand in the former Evergreen Solar plant on Barnum Road, absorbing 205,000 square feet of vacant space.

Why is Devens's warehouse space so alluring?

"They've got good, modern product and I think a lot of the space is just very large," Lipscomb said.

But the 495 North region may be close to maxing out growth. Lipscomb said warehouse facilities have been largely scooped up. Forinstance, he said the only large vacant facility that remains in Devens is a former Gillette plant, shuttered in 2010, which contains 330,000 square feet of warehousing and manufacturing space.

As available space gets tighter and rents rise, Lipscomb said the playing field will continue to become more balanced between landlords and tenants. And that's a sign that the overall economy is beginning to rebound, according to Lipscomb.

"I wouldn't say it's a landlord-friendly market, but I would say there's a little more equilibrium between landlord and tenants," he said.

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