Although suburban Boston’s southern industrial market cooled off during this year’s third quarter, the Myles Standish Industrial Park in Taunton, including 155 Myles Standish Blvd. (above), saw considerable leasing activity and one building sale.
Suburban Boston’s southern industrial market could be described as being Myles apart right now.
Despite several significant leases and one building sale at the Myles Standish Industrial Park in Taunton, the surrounding area has cooled following an encouraging beginning to 2005. According to third-quarter figures provided by both Lincoln Property Corp. and Spaulding & Slye Colliers, the southern sector was hit by more than 500,000 square feet of negative absorption during the summer months, blunting impressive results posted in other industrial submarkets. While some observers insist the drop is only temporary, most agreed that the southern region took its lumps in the third quarter, keeping average asking rents virtually flat and jumping the overall availability rate from 15.4 percent to 16.2 percent in Lincoln’s survey.
“That’s about right,” NAI Hunneman Commercial Co. Vice President James Grady said last week of the estimated plunge in absorption figures, an outcome he attributed mostly to a few large users giving up space in the market, including the TJX Cos. consolidating some of its operations into Connecticut. The demand side is actually more upbeat, according to Grady, with many smaller tenants moving to take advantage of industrial ownership opportunities, exemplified by the just-completed sale to National Refrigeration Inc. of 84 Independence Drive in the Myles Standish Industrial Park.
Grady and colleague Joseph Flynn negotiated the sale of that 24,000-square-foot manufacturing/warehouse building for just under $2 million, while Grady also brokered the $2.5 million sale of a Foxborough building, 77 Green St., and 290 Pine St. in Canton to users, in the latter instances helping City Lights Electrical relocate from Boston to a 63,000-square-foot facility that will accommodate its growth needs and allowed the firm to sell its former property to a condominium developer.
‘A Lot of Sense’
Investment sales have been a big piece of his business this year, said Grady, citing the opportunity for companies to take advantage of low interest rates and find a property they can tailor for their own purposes. “It makes a lot of sense if you can get the right [situation],” explained Grady, adding that the relatively cheap cost of capital still makes the alternative worth exploring.
As for the leasing at Myles Standish, Grady said he believes the 680-acre complex continues to attract businesses due to a combination of reasons, including a coveted location just off Route 128, a skilled labor pool that can draw off a population exceeding 1 million people in the surrounding area, and the attentiveness of the ownership, the Taunton Development Corp.
“It is very well-run,” said Grady, with Myles Standish Industrial Park today home to 80 companies employing nearly 7,000 people. In the recent surge of activity, Grady and Flynn brokered more than 100,000 square feet in three deals, the most recent being an eight-year, 26,000-square-foot deal by Ingram Micro Inc. at 475 Myles Standish Blvd. Other tenants taking space there included Electronic Contract Services Inc. and Excel Inc., which leased 155 Myles Standish Blvd., a 67,500-square-foot office/warehouse property. Kevin Hanna of Cushman & Wakefield of Massachusetts negotiated that deal on behalf of the tenant.
In the third-quarter assessment, Spaulding & Slye Colliers Research Director Benjamin Breslau also cited sizeable defections for impacting the south and Interstate 495 South industrial markets, with Jordan’s Furniture leaving behind space in Brockton and the TJX-related departure of company subsidiary Home Goods from Mansfield at 71 Hampden Road as major factors in the problems.
As a result, Spaulding & Slye registered 341,000 square feet of negative absorption in the 10.6 million-square-foot I-495/South submarket during the third quarter and an alarming 515,000 square feet of negative absorption in the South submarket, the largest in Greater Boston at 21.6 million square feet. While earlier activity in that area allowed the absorption rate for the year to remain slightly on the plus side at 66,000 square feet, the I-495/South submarket is now in the red by more than 150,000 square feet for the year.
While the region’s difficult economy has impacted industrial space in recent months, not all parts of the market are suffering, as evidenced by solid outcomes in the northern suburbs. The I-495/North submarket had 256,000 square feet of positive absorption in the third quarter alone, while the North submarket fared even better at 284,000 square feet of positive activity, Spaulding & Slye reported.
Even with the solid results, however, I-495/North still has an industrial availability rate of 32.7 percent and direct vacancy rate of 30.3 percent, both tops in the seven submarkets tracked by Spaulding & Slye. The North submarket has fared much better on those indices, posting a 14.0 percent availability rate and 11.6 percent direct vacancy at the three-quarter pole.
Lincoln Property Co. Director of Research Emily Schwartz also reported encouraging trends for the industrial sector, noting that results would have been better save for the difficulties in the southern region. One positive note occurred in the I-495/Route 2 West submarket that finally saw its availability rate fall under the 20 percent mark to 19 percent.
Despite pockets of difficulty, Schwartz concluded in her report that the Massachusetts industrial market is poising for a rebound, noting that the state has gained 1,500 manufacturing jobs in the past six months, while the trade, transportation and utilities arena saw an additional 1,000 positions. Smaller users have been a backbone of the activity in 2005, but Schwartz said several large requirements could lead to a rapid recovery once those real estate needs are met.
