Holiday Scramble Spurs UPS, USPS To New Warehouse Leases Around Boston

The entities that do Santa's dirty work are beefing up their warehouse networks around Boston in anticipation of a brutal holiday season.

Ups And Other Package Carriers Are Opening More And More Distribution Hubs.

UPS and the United States Postal Service are among the warehouse users trying to mitigate massive supply chain delays in anticipation of a holiday rush of online shopping, all while there is unprecedented demand for industrial space in Greater Boston.

The Postal Service over the summer signed a 210K SF warehouse lease in Avon, approximately 20 miles south of Boston, and a 96K SF full-building lease at 111 Constitution Blvd. in Franklin, 41 miles south of Boston.

“These facilities have been leased as annexes to assist our processing facilities in Brockton and Providence with handling the surge of parcels, especially during the upcoming holiday season,” a USPS spokesperson said in a statement.

UPS signed for 150K SF at a new Marcus Partners speculative project, also in Franklin. The leases were reported by both Hunneman and CBRE in their respective Q3 industrial reports.

“Those kinds of companies have been looking to expand in the market for some time,” Hunneman Director of Research Tucker White said. “You have plenty of companies that are trying to mimic what Amazon’s doing, selling goods online is becoming more popular. A lot of those are dependent on FedEx, UPS and the Postal Service.”

USPS secured 210K SF at 275 Bodwell St. in Avon, a property owned by Atlantic Management, according to public land records. The federal agency's smaller 96K SF lease is at 111 Constitution Blvd. in Franklin, owned by landlord RREEF Funds, part of The DWS Group, the asset management arm of Deutsche Bank, land records show.

Photo credit: Courtesy of Marcus Partners
The new warehouse at 206 Grove St. in Franklin, Massachusetts.

UPS will move into 206 Grove St., a warehouse advertised by Marcus Partners and CBRE as “cold storage and biomanufacturing ready,” that features 36-foot clear heights and 34 loading docks, coveted e-commerce features.

The soon-to-be distribution site garnered interest from a wide variety of users as the building’s core and shell were being completed over the summer, Marcus Partners Senior Vice President of Construction Josh Berman said.

“Two years ago tenants were looking 12-16 months out for their next move,” he said. “What we’re seeing in the market today, tenants are really planning 4-6 months out.”

CBRE declined to comment on the lease and UPS didn’t respond to a request for comment.

Restaurant and food service supplier TriMark USA inked Greater Boston’s largest lease between July and September, for 345K SF in Bellingham close to the Rhode Island state line, a spec project by a joint venture of Barings and Lincoln Property Co.

The warehouses were rare finds for the tenants, with just six industrial assets larger than 100K SF left in the market, according to Hunneman’s Greater Boston Industrial Q3 Market Report. Twenty-five new industrial projects are all expected to deliver under 50K SF each. Average asking rents for the Greater Boston market are now $11.94 per SF and have risen between 10% and 15% in the past 12 months along I-495.

Vacancy across the market hit 1.9%, the first time it has ever dropped below 2%, CBRE said in its Boston Industrial Q3 Report. Tenants are seeking approximately 35M SF and absorbed 3.2M SF last quarter. The brokerage is still predicting an unprecedented delta of supply and demand for the next 18 to 24 months.

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