Transwestern|RBJ finds rising vacancy in 495 West industrial market
The Greater Boston industrial real estate market made “strong gains” in the second quarter of 2015, according to Boston-based commercial brokerage Transwestern | RBJ.
But the picture along the Route 495 belt is spotty. In the western submarket of the region, which includes the Boroughs’ towns as well as Hopkinton, Natick, Framingham, Sudbury, Wayland, Milford, Hudson and Bolton, the numbers slid the other way.
Warehouse, manufacturing markets lose ground
Vacancies rose in two of the three industrial segments RBJ tracks: Warehouse vacancies rose 64,000 square feet (which is referred to as “negative absorption”) while manufacturing vacancies increased 44,000 square feet. Those segments have struggled to land tenants over the last 10 months, with warehouse negative absorption totaling 245,000 square feet and positive absorption of just 65,000 square feet in that period.
The flex segment, which refers to a combination of office and manufacturing space, fared slightly better in the second quarter, eking out a 7,000-square-foot absorption gain. Overall, flex was the strongest performing segment in the quarter for all markets along I-495, stretching from Franklin in the south to Chelmsford in the north. Transwestern reported positive absorption of almost four percent for all submarkets over the last five quarters.
Broker: No big push from tenants
Whatever gains or losses the market experienced, it’s clear that the industrial leasing and sales market still favors tenants, according to Joel Aho, a broker with Concord-based O’Brien Commercial Properties Inc. Aho, who announced two lease deals this week, said that when landlords ask him how long it will take to find a tenant or buyer for an industrial property, it’s tough to offer a straight answer.
“I don’t necessarily see a big push from tenants in this market,” Aho said.
But that’s not necessarily an indication that the local industrial real estate industry is responding to larger negative economic factors, considering that Aho, who has been in the business since 2003, has never seen an industrial market in the I-495 West region that favors landlords. It’s probably been a tenant’s market since the dot-com boom in the late 1990s, Aho said.
On the other hand, Aho has looked to those more seasoned than himself to gauge overall market conditions, and it’s not all bad news for the landlords. One long-time broker recently mused that fewer landlords are outfitting industrial space to meet the needs of specific clients, instead requiring the tenants to pay for the work themselves. That’s a potential sign that the market is strengthening for the landlords.
It’s also important to note that just a couple of tenant movements — or perhaps even one — can easily push industrial market segments into negative absorption territory in a given quarter. For example, Transwestern Director of Research Chase Bourdelaise pointed out that one tenant, Workflowone Inc. of Westborough, became a major driver of increased vacancy in the 495 West submarket when it vacated 116,000 square feet on Sassacus Drive iast year.
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