By Charles D. Reilly, Vice President of Business Development
2017 will see a reduction in the build-to-suit market this year following the very strong, build-to-suit market of 2016 here in New England. But let’s not feel sorry for ourselves – it’s not every year you see major corporate office buildings constructed in eastern Massachusetts within six miles of each other on Route 128 in the Burlington/Waltham corridor. Clarks Shoes, Wolverine Worldwide, Vistaprint, Thermo Fisher Scientific, and Millipore, have been occupied. Anchorline’s Post at 200 Smith Street, Waltham, is a speculative 400,000 square foot former Waltham Post Office building repositioning to first class office space, and directly across the highway is Boston Properties’ newly upgraded building at 170 Tracer Lane. Sitting at 1560 Trapelo Road is the vacant 61,000 square foot former Autodesk’s building available for sublease. So the challenges for new corporate office projects include existing inventory available for immediate occupancy, a lack of available sites, and increased construction costs which all contribute to a slower market.
Turning to the industrial market, FedEx Ground is the most active global player in the New England market with three 300,000 square foot sorting centers set to break ground this spring in Boylston, Seekonk, and Quincy, plus a rehab of an existing center in Wilmington. In Peabody, Dacon is looking to break ground on a 140,000 square foot build-to-suit project in Centennial Park for a national logistics company. In Beverly, Krohne America is under construction with an 80,000 square foot headquarters and manufacturing plant. W. L. French Excavating Corp., the Billerica-based site contracting firm, will build a 50,000 square foot, three-building headquarters and maintenance facility on Esquire Road. Prudential Overall Supply is erecting steel on Simon Street in Nashua for their 70,000 square foot commercial laundry. F. W. Webb Company is completing its one million square foot distribution center in Londonderry.
Cannabis will come front and center as AmeriCann, Inc. is planning a Phase 1, 133,000 square foot growing center in Freetown while NETA Care is planning a 35,000 square foot addition in Franklin. Colliers predicted in the NAIOP/SIOR 2016 Year-End Market Summary that the marijuana market could require over three million square feet of growing and processing space over the next five years. Amazon is still searching the Massachusetts market for another sorting center after occupying over 1,500,000 square feet of space the past two years in Fall River, Stoughton, and Everett. In Connecticut, ground should be broken this spring for a 700,000 square foot, three-building national food supplier in Windsor. And in Johnston, RI, Citizens Bank just broke ground for their 425,000 square foot corporate campus.
Construction costs realized an overall increase of approximately five percent in 2016. It will be interesting to watch how supply and demand forces affect material costs in reaction to potential moves by the Trump Administration relating to potential infrastructure programs passed through Congress. And it’s anybody’s guess what the potential will be on tariffs and overseas construction materials.