The inner suburbs are among the areas where the local industrial market scored some momentum in the first quarter of 2003, including a 35,000-square-foot lease to RMS Services at this building at 100 Rustcraft Road in Dedham.
It wasn’t exactly a hotbed, but industrial real estate fared relatively well in the first quarter of 2003, with a number of sizeable deals making their way through the pipeline, and market fundamentals considerably better than that offered by the struggling office sector.
“I’d say the industrial market has been steady as she goes,” said Wayne Spiegel of NAI Hunneman Commercial Co. “Vacancy rates aren’t outrageously high, pricing is holding pretty strong and negotiations are still pretty even-handed … It’s not doom-and-gloom by any means.”
As indicated by Cushman & Wakefield’s first-quarter statistics, the end of the industrial market that catered to high-tech companies has seen its share of trouble, but old-line manufacturing and distribution properties have benefited from a solid stream of demand from retail stores, food chains and even the health care arena. With a suburban total of 222 million square feet of industrial space, Cushman & Wakefield reported negative absorption of 723,000 square feet in the first quarter, but nearly all of the problems occurred in the technology-heavy northwest corridor. The south region, for example, had positive absorption of 484,000 square feet, reflecting the strength of the more traditional industrial users dominating that submarket.
Spaulding & Slye Colliers showed a balanced industrial market in its latest overview, a 56.1 million-square-foot sampling that does not include the research and development (R&D) and flex properties surveyed by Cushman & Wakefield. Greater Boston currently sports an 11.8 percent industrial vacancy rate, according to Spaulding & Slye, with the availability rate now at 15.9 percent and year-to-date net absorption an encouraging 377,000 square feet. That compares favorably to the first quarter of 2002, when Spaulding & Slye tracked negative industrial absorption of 89,000 square feet, a difficult start for a market that ended the year in the red by 155,000 square feet. The survey also pointed most of the difficulties to the north submarkets, with nearly 350,000 square feet of negative absorption in that area during 2002.
‘A Slow Start’
Cushman & Wakefield principal Catherine Minnerly said last week she is upbeat about the prospects for the industrial sector moving forward. “It was a slow start at first, but there are deals getting done, and we’re starting to see requirements popping up,” she said, citing one property in Brockton that had garnered little attention for months until earlier this month when there were four showings in a one-week stretch.
Another property, 140 Morgan Drive in Norwood, has received a substantial boost from the market of late, with Minnerly representing the owner in two major leases. Along with a 72,000-square-foot agreement with Home Maintenance, an offshoot of Home Depot, Minnerly represented owner Ventnor Assoc. in a 180,000-square-foot lease to Home Market. The food distribution company is occupying a combination of office, freezer and processing space in the facility. CB Richard Ellis/Whittier Partners broker Austin Smith handled the lease for Home Maintenance, while Joel Miller was the broker for Home Market.
The Myles Standish Industrial Park in Taunton also had a solid first quarter, with significant deals there including a 60,000-square-foot lease by Shaw’s Carpet at 275 John Hancock Road, and the Ryan Co.’s 25,000-square-foot deal at 25 Constitution Blvd. Meanwhile, Radar Properties represented CRA Waste Management in a 20-year, 104,000-square-foot lease at 260 Kenneth Welch Drive in Lakeville. “That was definitely a big one,” said Spiegel, particularly given the lengthy lease term.
North of Boston, Mark Stevens of GVA Thompson Doyle Hennessey & Stevens recently brokered an 81,000-square-foot lease at 80 Industrial Way in Wilmington. The deal follows the landlord’s decision to raise the ceilings in the 230,000-square-foot building, an action designed to improve its marketability. “It was a good idea that seems to be paying off,” said Spiegel. S.G. Taurus Co. agreed to lease the 81,000-square-foot portion of the building.
Overall, Spaulding & Slye reports that there has been little change for the industrial market, with the vacancy rate just slightly lower at the end of the first quarter of 2002 when it stood at 10.8 percent. The availability rate has remained virtually unchanged during the past 12 months, standing at 16 percent after the first quarter of 2002. Rents have actually improved during that time, from an average of $6.39 per square foot last year to where it is now averaging $6.48 per square foot.
Even with the problems encountered for industrial space north of Boston, Atlantic Tambone landed another sizeable tenant for its speculative industrial building in Billerica at 14 Aegean Drive. Cytyc Corp. of Boxboro leased 38,000 square feet in the 235,000-square-foot warehouse/distribution facility, which Atlantic Tambone developed in partnership with Cigna Insurance. The inner suburbs also scored a bit of momentum in the first quarter, including a 35,000-square-foot lease to RMS Services at 100 Rustcraft Road in Dedham. The 500,000-square-foot complex is owned by Liberty Properties, which worked with John F. Cremmen of Spaulding & Slye Colliers in negotiating the 10-year agreement with RMS, a full-service records management company.
Joe Clements may be reached at jclements@thewarrengroup.com.
