It’s no industrial revolution, but Greater Boston’s industrial real estate market has seen some major vacancies absorbed in the last quarter, and real estate professionals are hoping big tenants still looking for space will erase even more properties from the ‘available’ column.

The industrial market made a sharp turnaround as companies absorbed 1.2 million square feet of space during the first few months of 2011, after seeing a million square feet of negative absorption in the last quarter of 2010, according to a report from CB Richard Ellis.

Real estate professionals agreed that industrial business is up from two years ago, which they attribute to a better jobs picture and an improving economic outlook, and some say they have seen an increase in activity of up to 15 percent from a year ago. Now, they are looking forward to some major tenants taking even more space off the books.

“Tenant velocity in the market has picked up significantly,” said Steven Clancy, a partner with CB Richard Ellis. “There have been some significant deals signed recently, and there are some significant tenants still in the market.”

According to sources, workforce management company Kronos is looking for about 300,000 square feet, and MIT Lincoln Laboratory is also seeking a large block of industrial space. Lindenmeyr Munroe, a New York-based paper company, recently signed for about 130,000 square feet in Bellingham. American Tire Distributors penned a lease for about 100,000 square feet in Franklin.

Deals In The Works

Like many of the large tenants in the market, those companies took higher-end, state-of-the-art space, Clancy said. He said many are looking for industrial space south of the Massachusetts Turnpike, where much of the region’s industrial inventory is located.

There are new tenants that have not previously had a presence in the region, like the tire distributor. But the recent surge in leasing activity is the result of many deals that were in the works for a while that all happened to close around the same time, said David Gilkie, senior vice president for NAI Hunneman.

“There have been a lot of tenants in the market looking for a long time,” Gilkie told Banker & Tradesman. “There are still more in the marketplace, so we hope this activity will have legs into the next quarter or two. I think there’s some more confidence in the market, and I think a lot of these companies that had been holding back, specifically in the energy field, will be more active.”

Greg Halloran, director of research for CBRE, said a marked shift has occurred in the industrial market, as improvements in confidence in the overall economy have driven an uptick in distribution.

Smaller landlords and companies have been more active as well. In just the last month, Unicorn Realty has seen a spike in new leases and showings of space in the three industrial parks it owns and operates in Hanover, Plymouth and Pembroke. Vacancy rates are higher than usual, especially in Hanover and Pembroke, where the Hanover Business Park and Corporate Park, respectively, are hovering at about 20 percent. But the company is experiencing 15 percent more business than at this time last year, said Robert Fraser, senior broker for Unicorn Realty, noting that Grissom Park in Plymouth is only about 9 percent vacant.

“The whole thing is about jobs,” he opined. “When the economy starts to generate some jobs, we’ll see improved industrial market conditions … But the phones are ringing more, and our showings are up considerably.”

Premium Activity

Along with the industrial pickup, the Greater Boston office market saw positive absorption for the fourth quarter in a row, which CBRE’s Halloran said foreshadows an active leasing year. Boston, Cambridge and the suburbs all experienced increased leasing activity in the first quarter of 2011, for a total of 623,409 square feet of positive absorption, according to a CBRE report. That makes a total of 1.9 million square feet of positive absorption in the market over the last year.

While several quarters of positive absorption signals that the market is heading in the right direction and fundamentals are improving, the improvements are still uneven. The south market still trails the west and north markets, particularly Route 128 West and North and Route 3 North, which have improved substantially over the last few quarters thanks to tenants’ flight to quality in Waltham, Burlington and Bedford, according to Halloran.

“Since rents have fallen over the last few years, tenants have looked to upgrade, and activity has been the busiest in premium space with access to the best amenities,” Halloran said.

CBRE’s brokers have seen increased tenant activity in the first quarter, even in markets where not a lot of transactions have closed, leading them to think this will be a year with renewed leasing actions, Halloran added.