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.
Eric Reenstierna Associates LLC is a real estate appraisal firm taking on valuation and consultation assignments in Greater Boston, Massachusetts and New England. Eric Reenstierna, MAI, is the office's principal and is a commercial real estate appraiser.
24 Thorndike Street
Cambridge, Massachusetts 02141
(617) 577-0096
ericreen@tiac.net