The stimulus that e-commerce and logistics companies are having on warehouse construction in the U.S. grows every year, and last year was no different. The Chicago market placed in the top-five nationwide for big box leasing volume.
According to new CBRE research, e-commerce and logistics companies claimed a larger share of the 100 largest industrial/logistics leases signed last year than they did in 2017. This makes sense, of course, as many logistics companies—specifically third-party logistics providers—handle distribution for e-commerce, a segment of the economy that shows no signs of slowing down.
“E-commerce remains the main driver of leasing activity and we continue to see big users expanding at impressive rates,” said Jason Lev, senior vice president with CBRE’s industrial and logistics group. “As consumer patterns continue to evolve, we will likely see even more growth in the foreseeable future.”
The analysis found that 61 of the largest 100 leases in 2018 were signed by e-commerce companies and logistics firms for a total of 61.5 million square feet, ranging in size from 742,000 to 2.3 million square feet. In the previous year, those two sectors claimed 52 of the largest leases for a cumulative 43.2 million square feet.
The e-commerce industry itself pulled a 41 percent share of the top deals, includes more retailers that are implementing omnichannel strategies. Of the 20 deals that logistics companies accounted for, 40 percent involved e-commerce distribution.
However, the largest industrial leases got even larger last year, regardless of industry. Spanning uses such as manufacturing, food and beverage, technology and retailing—in addition to e-commerce and logistics—the 100 largest leases of 2018 accounted for 19 percent more space over the previous year. Fully half of the deals were for warehouses over 970,000 square feet, reflecting a demand for larger, taller modern buildings.
Last year’s largest industrial leases were spread across 32 markets, with many clustering in leading logistics hubs. California’s Inland Empire led the pack with 20 leases accounting for 18.9 million square feet, followed by Pennsylvania’s I-78/I-81 corridor, Dallas-Fort Worth and Atlanta.
Chicago rounded out the top five, with five deals totaling 4.4 million square feet. Other Midwest markets claimed several large leases, including Columbus with four, Detroit with four and St. Louis with three.
“These are among the leading markets that offer the high-quality logistics facilities that many of these e-commerce users are seeking,” said Chris Zubel, CBRE Americas industrial and logistics investor leader. “This activity builds upon itself when a region provides the transportation access, qualified labor pool and state-of-the-art real estate that many e-commerce users need.”