Industrials 2003

Like the residential market, the industrial market experiences different levels of value at different locations. We do not expect a standard three-bedroom Colonial in Peabody to sell at the same price as the same house in Dover. Though the two houses may be identical in age, size, quality, and other physical features, we understand fully that one house may bear a value twice that of the other. For industrials, the same is true. And for industrials, it may be that the fortunes are reversed, with the Peabody industrial worth twice as much as its Dover twin.

To know these differences in a comprehensive way requires an apples-to-apples comparison of similar industrial buildings from one location to the next. To display them requires a GIS (Geographic Information System) map. The industrial GIS map, or Baseline Map, for Greater Boston for January, 2003 accompanies this report.

When we last studied industrials through the use of the Baseline Map in January, 1996, the Greater Boston industrial market in general was at a lower level of price. Since 1996, the market has seen a decline in vacancy through 2000 and an accompanying run-up in rents; sharply rising vacancy in 2001 and rent decline; and a current resurgence due to investors seeking real estate as an alternative to the stock market. Rents present a mixed picture, from which a variety of arguments can be made. The price picture, however, is clear. The data displayed in the 2003 map, derived from a statistical analysis of a large body of arm's-length sales, show a general increase in prices for Greater Boston industrials ranging from 50% to more than 100%. The average is about 70%.

High levels of value are supported at these locations:
- Route 128 from Waltham to Burlington
- Route 95 between Westwood and Mansfield
- Route 495 from Hudson to Franklin

Not surprisingly, locations near highway interchanges and in high-quality industrial parks (Centennial in Peabody, University Park in Westwood) produce high value. Lower values are found in the Route 24 corridor and at Route 495 North. Low values are often found at locations distant from highways and along former rail corridors, where the poor quality of abutting properties can drag down the value of the average-quality building that the map depicts.

The range of prices for the average-quality, 1975-era industrial building shown in the Baseline Map is from $35.00 to more than $100.00 per square foot. Location alone accounts for the range. Knowing the highs and lows of the map - where demand is rising, where it is in decline - is the key to an informed investment decision.