Dive Brief:
- National real estate developer and investor CRG has started development on a 662,500-square-foot industrial warehouse in Plainville, Massachusetts, approximately 25 miles southwest of downtown Boston. The spec project is geared toward a tenant in consumer goods distribution.
- As a large-scale modern facility, The Cubes at Plainville would be unique in its market. Newmark reports that the Greater Boston industrial market has no existing Class A warehouses larger than 100,000 square feet in size.
- Greater Boston's industrial market vacancy has fallen below 2% vacancy over the past 24 months, and strong demand has created over 20 million square feet of active requirements, or cumulative warehouse space demands from potential tenants, according to Newmark. At the same time, new inventory is not expected until late 2022 or 2023.
Dive Insight:
The Cubes at Plainville will feature a 36-foot unobstructed warehouse ceiling height, early suppression fast response sprinklers, 126 dock doors, 361 auto spaces and 145 trailer spaces. CRG's parent company, Clayco, will lead construction on the project, and subsidiary Lamar Johnson Collaborative will serve as architect. The project cost has not been disclosed.
Demand for warehouse space, and a consummate rise in warehouse rents, has taken hold across the country, owing to the rise in e-commerce accelerated by the COVID-19 pandemic. Vacancy rates are at a record low of 4.5% in the second quarter of 2021 and asking rents have risen 6.8% year over year from July 2021. As of the third quarter of 2021 the Boston industrial market's asking rents have risen 11% year over year, and its vacancies match the national level at 4.5%, according to Newmark.
Frank Petkunas, senior vice president and partner of CRG, told Construction Dive that the company had had its eye on the Greater Boston market, and New England more broadly, since mid-2018.
"Number one, there was a lack of available inventory, and number two, there was a lack of contemporary inventory. I mean things that were designed to modern standards, and really reflective of current tenant demand," Petkunas said. "There's a very dense population base [there], a lot of people, a lot of disposable income. And [distributors] needed a more efficient way to service those areas and that particular income base for consumer nondurables."
Once CRG identified the need in the market, the company began looking for development properties. This process continued into the pandemic, which exacerbated existing issues in logistics and supply, spurring even more demand for industrial space. "Everybody realized that if you're experiencing stock outs and low flow of inventory, it's a little bit easier if you have warehouses more proximate to the population bases," said Petkunas.
Despite high barriers to entry in the Boston area — including permitting issues, material shortages and difficulty finding suitable sites, according to CRG — Petkunas said that The Cubes at Plainville project is not experiencing any issues in supply beyond the shortages affecting all sectors, nor in permitting beyond the norm for the jurisdiction.
"Plainfield Township in Massachusetts is a small township. So therefore, the scrutiny on your project is elevated in comparison to … the county level," Petkunas said. "So I'm not gonna say it was complicated, but a lot of questions have to be answered and rightfully so."
