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As Amazon founder Jeff Bezos prepares to blast off on the first crewed flight of his aerospace company’s New Shepard capsule next week, real estate developers are exploring new frontiers in far-flung searches for suitable e-commerce sites in Massachusetts.
“With the barriers to entry throughout the entire eastern part of the state, developers are looking well past [Interstate] 495, which is a first,” said Rachel Marks, industrial market practice leader at CBRE. “We’ve never seen anything built on spec outside of 495, and we’ll probably have 10 to 15 going up in the next 36 months.”
Massachusetts’ biggest warehouse would rise 100 feet and cover nearly 15 acres of central Massachusetts farmland in the town of Charlton to accommodate Amazon’s continuing storage and distribution space grab.
A backlash to delivery truck traffic is resisting warehouse development in some Boston suburbs, with Needham rezoning a Highland Avenue near Route 128 in May amid warnings that a large Amazon distribution center could have been developed.
Labor unions have protested Amazon’s ongoing redevelopment of the Osgood Landing office campus in North Andover, and cautioned against effects of a potential Amazon warehouse at the Foodmart Road property in Boston. Opposition from Boston officials prompted developer Core Investments to drop plans for a last-mile delivery hub on Dorchester Avenue.
“Amazon has a reputation of sticking it to workers and they’re certainly doing that in the communities where they can just roll over the process and get what they want, because they’re Amazon,” said Lou Antonellis, business manager of the International Brotherhood of Electrical Workers Local 103. “Our argument is that Amazon needs Boston, but I don’t think Boston needs Amazon. Boston has a vibrant economy and lots of economic engines. Maybe outside communities do.”
Foodmart Road developer Able Co. said it’s continuing to evaluate options for the nearly 20-acre site.
“During this period, the company is gauging interest from a number of public and private stakeholders, a process that will help shape our plans as we move forward,” Able Co. said in a prepared statement.
Developers scouting sites for large e-commerce storage and distribution centers are looking to central Massachusetts and suburban office parks with vacant land for additional development capacity.
Welcome Mat in Worcester County
Rural towns such as 14,000-population Charlton have been more receptive, with local voters overwhelmingly approving zoning for a 100-foot-tall warehouse on a 98-acre site on Sturbridge Road in May. The 2.9 million-square-foot structure would become the largest industrial building in Massachusetts, according to Colliers International research.
“A large majority of residents recognize that based upon our inevitable growth, additional revenue is needed. To have additional development on Route 20 is really the right place to put it,” Charlton Selectmen Chairman Bill Borowski said.
The stage is set for a new outer ring of industrial development, with more than a dozen distribution projects under way on speculation outside I-495, according to commercial brokers.
Developers are betting that the projects will have the same rate of success as recent projects closer to Boston. Since 2017, 94 percent of all speculative industrial space in Greater Boston has been leased, according to Newmark research.
“E-commerce giants are what’s pushing it the most,” said Liz Berthelette, director of research for Newmark in Boston.
Despite pushback, Amazon’s relentless expansion has included major facilities including the 800,000-square-foot former Necco factory and the ex-Showcase Cinema property in Revere, and a 600,000-square-foot facility on Bartlett Road in Northborough which opened in November and is being marketed for sale by Colliers International.
Greater Boston now ranks as one of the top industrial real estate markets in the U.S., according to Newmark research. The vacancy rate hit a new low of 5 percent in the second quarter, according to preliminary data.
“Availability of land is coming into play with industrial development, continuing the push further outside of the metro,” Berthelette said.
Colliers tracked 1.3 million square feet of positive absorption in the eastern Massachusetts industrial market during the second quarter, bringing vacancies down 0.8 percent to 7.4 percent. Brick-and-mortar retailers are following e-commerce players’ strategy of building distribution sites close to population centers, with the Framingham-based TJX Cos. leasing 200,000 square feet at 75 Campanelli Drive in Braintree.
“The fundamentals continue to strongly support additional growth and the need for more product in and around Massachusetts,” said Aaron Jodka, national director of capital markets research for Colliers.
Office parks with additional land for development are one remaining option. Braintree-based industrial developer Campanelli on June 23 acquired the 350-acre Cisco Systems campus near I-495 on the Boxborough-Harvard border. The campus offers an “attractive repositioning opportunity” with 110 developable acres, according to marketing materials by JLL Boston. Campanelli did not respond to requests for comment.
Urban Industrial Supply Evaporates
Long-time industrial districts such as Charlestown’s Rutherford Avenue are being repurposed with housing, office and lab space, including the ongoing redevelopment of Hood Business Park. That’s starting to attract well-capitalized developers such as New York-based Related Cos., which paid $74.5 million this month for a nearly 4-acre portfolio which includes warehouse and self-storage space. The 100 percent leased property was marketed by CBRE as having capacity for future redevelopment.
Steve Adams
“In the long run, I imagine it is going in a different direction because of the money they paid for it and who the buyer is,” said Rob Cronin, a senior vice president at Lincoln Property Co. “I’m at a little bit of a loss for what comes next after 25 years in the industrial market. It’s a constant grinding to find space for tenants.”
Marks, the CBRE broker, struggled to name a single neighborhood in Boston and surrounding cities where industrial development still makes financial sense. Wholesalers forced to relocate from the New Boston Food Market following its acquisition by a development group last year have moved as far as Bristol County, with the implications for higher fuel costs and longer delivery routes.
“Most of them have gone north up I-93, and a few down south. They’re moving further than they would have liked, and very few have actually stayed in the city,” Marks said.
