It makes sense that companies want to open their distribution centers near the country’s major air hubs. This makes sense for companies looking for the speediest deliveries. But here’s the catch: Opening near a major U.S. airport comes with a hefty price tag.
A recent study by CBRE said that industrial rent premiums average 13 percent in the top U.S. airport submarkets. And one submarket is particularly expensive: The O’Hare Airport submarket near Chicago. According to CBRE, the industrial rent premium here is 47 percent, the highest in the country.
Coming in behind Chicago is the Oakland, California, airport submarket with industrial rent premiums of 32 percent. The Dallas/Fort Worth Airport submarket came in third place with a rent premium of 22.1 percent.
Cal Payne, a senior vice president in CBRE’s Chicago office, said that despite the high premiums, the Chicago O’Hare sumbarket continues to see high demand from companies seeking locations for their distribution centers. This submarket is also seeing record-low vacancy rates, according to Payne.
“Many businesses that previously relied on ocean cargo are shifting towards air cargo due to the delays at the ports,” said Payne in a written statement. “Further, there is an insatiable appetite from developers for redevelopment opportunities to accommodate this strong user demand.”
CBRE says that third-party logistics firms are the main drivers of this activity, accounting for 29.6 percent of the activity in major airport submarkets. That’s followed by general retail and wholesale, which accounts for 24.4 percent of the activity, and pure-play e-commerce-only companies, which accounted for 16 percent of the activity at these airport submarkets.
“As ecommerce providers and retailers compete to offer faster delivery times, air freight will increasingly be a key component of distribution strategy,” said John Morris, executive managing director and leader of CBRE’s Americas Industrial & Logistics business, in a written statement.
Morris said that rents for warehouses and distribution centers around major air cargo hubs should continue to rise, especially in markets where there is limited development space.