After two years of strong demand driven by a booming economy and the rapid growth of e-commerce, Boston’s industrial sector is experiencing a cyclical reset, according to a U.S. Industrial Construction report published by Cushman & Wakefield. 

As the construction of new industrial spaces reaches its peak, demand is beginning to slow down, signaling a return to a more balanced market. Despite economic uncertainties, high inflation, and interest rates, the industrial market in Boston remained positive in the first quarter of 2023. Leased industrial space amounted to 1,017,259 square feet, with a net absorption of 1,091,979 square feet. Vacancy rates decreased slightly to 4.2%. 

Looking ahead, tenant demand is expected to decelerate, aligning with earlier stages of the expansion cycle, as consumer spending shifts and economic conditions soften. However, rent growth is projected to remain stable due to high occupancy rates in the industrial sector.