Tech and life science companies have been crucial drivers of growth in the Boston and Cambridge office and lab markets in recent years.
Now the sectors are starting to leave a mark in the suburbs, but their impact is being felt primarily in Greater Boston’s 160-million-square-foot industrial real estate market. Projects sponsored by Amazon and a Cambridge pharmaceutical company are creating growth opportunities for industrial developers, with plans for big manufacturing, warehouses and distribution plants taking shape.
“It’s a market that’s very healthy and it’s in a position where developers want to be able to deliver that building as soon as someone says ‘go,’” said Robert Gibson Jr., a partner at CBRE.
Greater Boston industrial market fundamentals have steadily improved in recent quarters, according to Transwestern RBJ’s indSTATus research report. Warehouse vacancies hit an all-time low of 11 percent in the fourth quarter, while asking rents for manufacturing space have increased 13 percent in the last 12 months.
Worcester Project Reawakens Factory Parcel
Developer Steven Goodman has over 100,000 square feet of speculative space available as part of the 650,000-square-foot warehouse he’s building in Worcester for anchor tenant Imperial Distributors.
GFI Partners, Goodman’s Boston-based development company, acquired the 36-acre parcel at 150 Blackstone River Road from The Davis Cos. for $5 million in 2013.
The site housed a long-vacant barbed wire factory dating back to the World War I era. The location and size of the parcel, next to a Providence & Worcester freight line and a three-minute drive to a Massachusetts Turnpike on-ramp, was too good to pass up, Goodman said.
“A lot of the (industrial) inventory is being repositioned and being reused for higher and better uses,” Goodman said. “It’s being consumed by retail, residential, office and light manufacturing. The edge of the world is no longer Route 495, and (industrial) space is getting pushed out.”
The city of Worcester approved a 15-year tax increment financing agreement to support the $26 million redevelopment to house anchor tenant Imperial Distributors, which is consolidating warehouse space from four locations in Auburn. The company delivers non-food items to supermarket chains.
Imperial Foods will occupy over 300,000 square feet, and a current tenant, Mid-States Packaging, has committed to 160,000 square feet, Goodman said. He is in negotiations for the remaining space.
Moving Warehouses Closer To Population
Faster e-commerce delivery schedules and Amazon’s entry into the grocery delivery business have prompted the online giant to expand its holdings in Massachusetts. Amazon now offers free same-day delivery to Prime members in 16 U.S. metros, including Boston, forcing it to obtain warehouse space closer to population centers.
On the heels of its 328,000-square-foot Stoughton warehouse that opened last year, Amazon is building a 1-million-square-foot fulfillment center in South Coast Life Science & Technology Park on the Fall River-Freetown line, scheduled to open this fall.
Economic development officials in Fall River are hoping to recruit pharmaceutical companies to build manufacturing plants on 100 acres of available land in their life science park on the Freetown line.
And as Amazon expands its grocery delivery business, it leased 90,000 square feet of warehouse space at 201 Beacham St. in Everett, a half-mile drive from the New England Produce Center in Chelsea.
“Getting a brand name like Amazon can only help the entire market,” said J.P. Plunkett, principal of Red Dome Realty, a Boston-based commercial brokerage. “Any time you get a Fortune 25-type company coming to your backyard, you’re going to see a ripple effect.”
Availabilities of well-situated industrial parcels close to Boston have become scarcer in recent years, with developers tearing down old warehouses to build luxury apartments and renovating the buildings into trendy factory loft-style offices.
Other industrial parcels have been acquired for massive mixed-use developments, such as University Station in Westwood. Newton-based New England Development demolished industrial buildings on a 120-acre parcel to build a retail and multifamily complex that opened in 2013.
“Those (industrial tenants) had to flee for Canton and Stoughton and Avon, and that outpriced tenants who had been in those addresses for 10 and 20 years,” Plunkett said. “And that trickled down to Bridgewater and Brockton.”
Much of the recent industrial development is taking place in outer suburbs, where parcels have the advantage of good highway access and lower land prices.
Braintree-based Campanelli Cos. recently began the permitting process on up to 900,000 square feet of industrial development on an 87-acre parcel abutting I-495 in Bellingham, which it is promoting as a build-to-suit opportunity including 600,000 square feet of warehouse space. The parcel is next door to the 250,000-square-foot Seefried Industrial Properties-developed Victory Packaging facility, which has generated more interest in the area, according to a Campanelli press release. Campanelli executives did not respond to an interview request.
From Cambridge Labs To Suburban Factories
Biotech manufacturing from Greater Boston’s life science cluster has the potential to revitalize commercial development in Gateway Cities and outer suburbs that have lagged the economic recovery.
Cambridge-based Alnylam Pharmaceuticals has received approval from the town of Norton for a $7 million tax break that would support development of a $100 million drug manufacturing plant in Condyne LLC’s Norton Commerce Center industrial park. Alnylam spokeswoman Christine Lindenboom said the company has not made a final decision or secured the property from Braintree-based Condyne. Condyne President Jeffrey O’Neill did not respond to a request for comment.
In Fall River, economic development officials are recruiting pharmaceutical manufacturers for a pair of vacant parcels totaling just under 100 acres on Innovation Way in South Coast Life Science Life Science & Technology Park.
Officials there are hoping to leverage last February’s arrival of MassBiologics SouthCoast, said Lynn Creamer, economic development coordinator for the city of Fall River. MassBiologics is an FDA-licensed vaccine manufacturer sponsored by UMass Medical School that partners with private life science companies.
