The top 100 industrial leases of 2023? Tenants didn’t go as big last year

Going big? Industrial tenants didn’t do that as often last year.

Slowing demand for industrial and logistics warehousing space meant that tenants signed a smaller number of big industrial leases of 1 million square feet or more in 2023, according to a new CBRE report.

The number of 1-million-square-foot industrial lease signings dropped to 43 in 2023 from a record 63 in 2022. The culprits behind this drop? Blame economic uncertainty and changing inventory management practices, both of which CBRE says lowered the demand for big-box warehouse facilities.

Last year’s top 100 industrial leases by size totaled 98.6 million square feet, down 8% from 2022’s 106.9-million-square-foot total. The average lease size among the top 100 industrial leases last year fell to 986,744 square feet, down from 1.07 million square feet in 2022. Thirty of the top 100 biggest industrial leases last year were renewals, six more than in 2022.

Traditional retailers and wholesalers — previously leasing industrial space at a rapid clip — signed 30 of the largest 100 leases last year, down from 53 the year prior. Still, this category represented the largest number of top leases, according to CBRE’s research.

Meanwhile, third-party logistics companies responded to continued e-commerce growth by signing 29 of the top 100 leases in 2023, up from 11 in 2022.

“Throughout the pandemic and shortly thereafter, many occupiers were forced to shift from a ‘just-in-time’ to a ‘just-in-case’ inventory management approach,” said John Morris, president of Americas industrial and logistics for CBRE, in a statement. “This helped boost demand for warehouse space. While demand has now receded moderately, it remains historically strong. However, we do not expect as many mega industrial leases in the near and mid-term as we saw in 2022.”

The top markets for industrial leases of 1 million square feet or more included traditional mainstays like the Inland Empire and Chicago, as well as fast-growing markets such as Dallas-Fort Worth, Memphis and Savannah.

The eight U.S. markets with the highest share of top-100 industrial lease transactions in 2023