From Rick Schuhwerk
New England Industrial Lead
The third quarter saw the highest absorption of the year in the New England industrial market, totaling over one million square feet. Large lease transactions included: Amazon leasing all 332,676 square feet at 1000 Technology Drive in Stoughton, EMC Corp. renewing their 192,000-square-foot space at 109 Constitution Boulevard in Franklin, and Restoration Hardware leasing 118,555 square feet at 480 Sprague Street in Dedham.
Real estate fundamentals are improving steadily. Total vacancy is now at 7.5 percent and average direct rents at $5.54 per square foot NNN. High demand for the small supply of quality space will give landlords more leverage in lease negotiations, furthering the rent increases.
As a result of the improving market, investors are increasingly looking to industrial properties to take advantage of the growing upside of higher yields and growing market conditions.
The third quarter of the year saw 31 industrial sales transactions from properties larger than 30,000 square feet for a total sales volume of over $202 million. This is a significant increase from the $129 million of sales transactions seen during the second quarter of 2014.
With the limited availability of quality space, the emergence of build-to-suit projects is expected to continue as there are many currently in the negotiation and permitting process. There is even some speculative development rumored to be in the works. We’ll monitor this for a future post.