Boston’s industrial sector is experiencing a cyclical reset, according to a U.S. Industrial Construction report published by Cushman & Wakefield. After two years of strong demand driven by the booming economy and rapid growth of e-commerce, construction for new industrial spaces has reached its peak and tenant demand is beginning to slow down – signaling a return to more balanced market conditions.
Despite economic uncertainties such as high inflation and interest rates, Boston’s industrial market remained positive in the first quarter of 2023 with leased space totaling 1,017,259 square feet and net absorption reaching 1,091,979 square feet; vacancy rates decreased slightly to 4.2%.
Looking forward into the future it is expected that tenant demand will decelerate due to shifts in consumer spending habits as well as softening economic conditions; however rent growth should remain stable due largely in part from high occupancy levels within this sector.
