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Chris Legocki
Senior Director, Greystar Development Services
Age: 33
Industry experience: 10 years
Known primarily for its vast multifamily portfolio, developer Greystar is in the hunt for good sites in Massachusetts to provide expansion for industrial real estate tenants. Despite cutbacks by Amazon after its rapid growth phase, the industrial sector represents a relative island of stability among commercial real estate sectors, with local vacancy rates remaining in the mid-single-digits according to brokerage research. Chris Legocki oversees Greystar’s expansion into the market, including its first distribution center development currently under construction at 798 North Bedford St. (Route 18) in East Bridgewater. Before joining Greystar three years ago, Legocki previously was an executive for Skanska Commercial Development in Boston.
Q: As industrial uses get displaced from the urban core, what are the prospects for hybrid commercial developments with a mix of industrial and higher-income uses in places like South Boston and Newmarket?
A: There’s some very compelling other uses: life science and multifamily in particular, that make it difficult to hold out traditional distribution warehouses as the highest and best use. In order to underwrite that, you’d be getting into unprecedented land and stabilized property values for those kinds of warehouse projects. It’s a highly specialized user who needs to be in the kind of location like the Seaport, where you could justify a warehouse as a higher and better use than a life science or multifamily building. Those users have to have a very specific use type that requires them to have the urban location: cold storage and seafood processing are good examples, where it’s mission-critical. That’s a different animal than the broader distribution and logistics users that can operate outside of a hyper-urban location.
Q: How many active industrial development sites does Greystar have in Massachusetts?
A: We have a handful of sites that we’re actively pursuing, and we are in the early conceptualization and planning stages. East Bridgewater is the only site we’ve closed and started construction. It’s 412,000 square feet and we’ve been talking to tenants across different size ranges, generally targeting 200,000 square feet and up. We’ve only had the ability to tour the building for about four months now, so we’re seeing pretty healthy activity out there. We’re in discussions with a healthy number of groups, given the current economic environment and the broader decline in leasing activity we’re seeing.
Q: As Charlestown’s Rutherford Avenue gets rezoned away from industrial use, how do you expect the displacement to play out with relocations?
A: That’s a tenant-specific answer. They are usually trying to preserve access to their employee base, or their customer base. As far as displacement goes, it’s really the less functional industrial real estate that we’re seeing be displaced. Good functional industrial real estate, even if it’s aged, is in high demand and would be very difficult to develop today. That’s where you are seeing some very high rents in the urban core for industrial space. There is a lot of value in the remaining functional industrial real estate within the urban center, and we think it’s be difficult to underwrite redevelopment in a lot of cases going forward, especially in Boston, Cambridge and Somerville.
Q: How is the pace of industrial development in eastern Massachusetts matching up with current demand and leasing activity?
A: We think the fundamentals are still very attractive in Greater Boston and really all over the Massachusetts markets. New project starts have really slowed down. The existing supply that’s delivered and hasn’t been taken by tenants has somewhat plateaued. When you look at it in the context of average historical absorption, it feels very comfortable to be where we are. We’re looking at around 1.5 to two years of historic absorption available at this time. And overall vacancy rates are somewhere around 4 percent to 4.5 percent. Those fundamentals are very good.
Q: Is there still competition for sites in the suburbs between industrial and life science developers?
A: That has changed a bit. Industrial parcels have been competing in recent years with [current good practices manufacturing] type uses. They’re similar in building envelope and scale, but catering to different users and requirements for utilities and parking counts and structural capacity. The competition is generally centralized around submarkets where GMP-type uses have been established. Route 3 north of Boston between Burlington and Billerica is an established GMP cluster. I don’t think GMP works everywhere. Once you get out to the broader market, anywhere along the Interstate 495 and 95 rings, we found distribution uses are competitive and we’re not losing out on sites.
Q: Following its explosive growth and recent downsizing, how is Amazon driving the requirements among big users?
A: If anyone had an Amazon crystal ball, that would be the most valuable trade secret in the market. Historically, because of the scarcity of the class A product Amazon has rapidly grabbed what was available even if it didn’t tie into an immediate use, which resulted in them pulling back on some space commitments over the past year or so. Whether it returns in 2024 or 2025, it’s impossible to say.
Editor’s note: This report has been updated to correct Chris Legocki’s years of industry experience.
Legocki’s Five Favorite New England Hikes:
- Skyline Trail in the Blue Hills
- Cadillac Ridge Trail at Acadia National Park
- Mount Cardigan Loop Trail
- Cliff Walk in Newport, Rhode Island
- Tuckerman Ravine at Mount Washington
