MIT CRE — 11.S969 Commercial Real Estate Investment Strategy
Case Study Exercise — Industrial, 04.14.2026
Far Northeast Austin, TX vs. Lowell/Chelmsford, MA
85,000 SF New Construction Industrial Building
Assignment
Evaluate and compare two identical newly constructed, vacant industrial buildings. Both are located in established logistics corridors within their respective metros. Your assignment is to recommend one, and defend your choice based on the criteria outlined below.
Deliverables:
- 2–3 page bullet point format memo with recommendation
- PowerPoint style slides to support a ten-minute (or so) presentation
- Each team member to present at least one section (see below last section, Discussion & Presentation)
Workbook: industrial-case-study-austin-boston-h4-2026.xlsx — 10-year DCF templates for both buildings, GMP data for the top 20 U.S. MSAs (2012–2024), and a Comparison & Analysis tab.
Building Description
Each property is a modern, newly constructed and vacant 85,000 square foot industrial building with 32’ clear heights, 210-foot depth, suitable for a single tenant with approximately 5% office build-out (turn key spec build out included in sale price, blended NNN rent, no separate calculation for office space). Purchase prices listed below; all other statistics in this table are CoStar estimates — you will evaluate and use your own metrics to determine relative values. Assume 100% equity purchase (no debt).
Building & Market (CoStar submarket report)
| Metric | Property A: Far NE Austin | Property B: Lowell/Chelmsford |
|---|---|---|
| Purchase Price (PSF) | $130.00 | $180.00 |
| Total Price | $11.05 million | $15.3 million |
| Submarket Asking Rent (NNN) | $12.41/SF | $16.52/SF |
| Submarket Vacancy | 13.3% | 11.2% |
| Submarket Rent Growth | +0.8% | +1.7% |
| Under Construction (% of inv.) | 899K (5.2%) | 380K (1.3%) |
| Metro Under Construction | 15.2M (8.4%) | 2.4M (0.6%) |
| Metro Cap Rate | 7.5% | 7.1% |
Source: CoStar, 2026 YTD. All rents NNN.
A Note on Data Sources and Market Definitions
The submarket statistics above come from CoStar and use CoStar-defined submarket boundaries. Before you begin your analysis, take the time to pull up these submarkets on CoStar and examine the maps carefully. Understand exactly what geography is included in each submarket definition. Cross reference vacancy, rent and other data against other data sources (e.g. Green Street, CBRE, JLL, Colliers, Cushman & Wakefield).
Market and submarket definitions differ across data providers. For example, what CoStar calls the “Far Northeast” Austin submarket may correspond to a differently drawn boundary in CBRE research, where essentially the same footprint is split between “North” and “Far North” along different lines. JLL, Cushman & Wakefield, and Colliers each draw their own boundaries. The same is true in Boston: Lowell/Chelmsford in CoStar may not perfectly align with how other data providers define the I-495 North corridor.
Using the attached Excel workbook, insert the variables to construct a 10-year discounted cash flow analysis for each property on an all-equity basis. The workbook contains two pre-built cash flow tabs with editable assumptions (highlighted in yellow) and a Comparison & Analysis tab with market data. Your task is to review the assumptions provided, adjust them if you disagree, and render a recommendation.
Note on pricing: The Austin building is offered at $130/SF, a meaningful discount to CoStar’s reported submarket sale price of $186/SF. This reflects the current oversupply discount for a vacant building in the high-supply Austin industrial market. The Boston building at $180/SF is a modest discount to CoStar’s $202/SF, consistent with a tighter market where new supply is scarce.
Discussion and Presentation
10-to-15-minute presentation, appropriate number of PowerPoint-style slides. Each team member needs to prepare and present at least one section. In addition, prepare a brief written investment memo (2–3 pages). There are no limitations on the use of AI tools — your time should be spent understanding the competitive landscape so you can effectively discuss and defend your viewpoint in class. Discuss supply and demand as well as at least three additional topics from those listed below.
1. Supply and Demand
Austin’s industrial pipeline has slowed down since the post-pandemic boom, but remains the highest in the nation when measured against local inventory (see Industrial Regional Divergence) (CoStar stats include owner-occupied buildings and data centers, so spec industrial pipeline is not as big as it appears from this measure). Boston’s pipeline is negligible at 0.6% of inventory. Austin also maintains among the highest growth rates for population and business activity. The attached workbook contains gross metropolitan product data for the top 20 U.S. MSAs from 2012–2024 with CAGR calculations at 12-year, 10-year, 5-year, and 1-year intervals, plus comparison charts for Austin vs. Boston.
2. Demographics and Population Growth
Austin has been one of the fastest-growing metros in the U.S., driven by tech sector expansion and domestic migration from higher-cost markets. Boston’s growth is slower but its workforce is older, more educated, and deeply tied to the institutional and life-sciences economy. How does each metro’s demographic trajectory affect industrial demand? Consider the labor pool an industrial tenant needs and how far it is from each building.
Reference materials on CRE42:
- Domestic Migration & Regional Growth — MSA-level population data and analysis
- U.S. State Population Pyramids — interactive comparison tool
3. Replacement Cost and Inflation
Construction costs are rising nationally but vary significantly by market. Land and labor are materially cheaper in Texas than Massachusetts. Higher replacement cost in Boston creates a barrier to entry that supports existing asset values. Lower replacement cost in Austin means new supply can be delivered more easily, placing a ceiling on rent growth. How does this affect your view of long-term value in each market?
Reference materials on CRE42:
4. Climate Change
Both markets face climate-related risks over a 10-year horizon. Austin confronts increasing extreme heat events, water scarcity, and electric grid reliability. Boston faces rising flood risk, more intense storms, and aging coastal infrastructure. How might these risks affect insurance costs, tenant demand, and long-term asset values? Is one market better positioned than the other?
Reference materials on CRE42:
5. Technology, Robotics, and AI
Warehouse automation, robotic fulfillment, and AI-driven logistics optimization could fundamentally change how much space industrial tenants need — and what kind. Could these technologies reduce demand for 85,000 SF buildings? Increase it? Change the tenant profile? Austin has proximity to the Samsung semiconductor supply chain and major data center development. Boston has adjacency to the life sciences ecosystem and a deep pool of technical talent. Does either market have a structural advantage in attracting the tenants of the future?
Reference materials on CRE42:
6. Tax and Regulatory Environment
Texas has no state income tax and generally lower property tax burdens than Massachusetts. This makes Austin more attractive for tenants on a total occupancy cost basis. But Massachusetts offers a more predictable regulatory environment and deeper institutional infrastructure. Also, Massachusetts’ more stringent regulatory environment serves to limit competitive development in the future, whereas Texas’ more flexible permitting and building environment results in more construction, a dynamic we have seen in full view during the post-pandemic construction boom.
Attached Files
Sources
- CoStar Group — Austin and Boston Industrial submarket reports, 2026 YTD. Used for submarket inventory, vacancy, asking rents, rent growth, construction pipeline, and sale prices.
- CBRE Austin Industrial Figures, Q3 2024 — Austin construction pipeline and speculative pre-leasing statistics (9.5% of Q3 deliveries pre-leased). cbre.com
- CBRE Boston 2026 U.S. Real Estate Market Outlook — Boston industrial fundamentals and 2026 outlook. cbre.com
- CBRE H2 2025 U.S. Cap Rate Survey — National industrial cap rate ranges. cbre.com
- JLL U.S. Industrial Market Dynamics, Q4 2025 — National industrial leasing, rents, and pipeline statistics. jll.com
- U.S. Bureau of Economic Analysis (BEA) — Gross Domestic Product by County and Metropolitan Area, 2023 (released December 4, 2024). Primary source for GMP historical data. bea.gov
- BEA Regional Economic Accounts — Interactive Data, Table CAGDP2 (GDP by County and MSA). Used for 2012–2024 GMP time series. apps.bea.gov
- BEA GDP and Personal Income by County, 2024 (released December 4, 2025). bea.gov