LM    Topics     Logistics    3PL    CBRE

“Megawarehouse” demand hits record highs in 2022, reports CBRE


A report recently issued by Dallas-based industrial real estate firm CBRE shined a light on how demand for industrial and logistics warehousing space continues to increase.

According to the report, CBRE found that the largest 100 industrial lease transactions in 2022 included a record-high 63 deals for 1 million square-feet or more—known as “megawarehouses”—topping the 57 deals recorded in 2021. What’s more, it added that the average size of the top 100 leases was 1.07 million square-feet (MSF), supplanting the previous record, of 1.05 million MSF, set in 2021.

When looking at the sector verticals inking these megawarehouse deals, CBRE stated that traditional retailers and wholesalers represented 53 of the top 100, in taking steps to expand their respective footprints to “accommodate e-commerce sales growth and to hold more inventory to guard against supply chain disruptions.” That group was followed by 3PLs, with 18 signed leases, beating 2021’s 10 signed leases, and e-commerce companies rounded out the top three.

As for the markets seeing the most activity, for these leases, Southern California’s Inland Empire led the way, with 17 transactions, accounting for 20.9 MSF, followed by Chicago (11 transactions, for 10.4 MSF), Atlanta (eight transactions for 8.0 MSF), Savannah (six transactions for 6.8 MSF, and Dallas-Fort Worth (six transactions for 5.9 MSF).

“Despite an expected recession, the leasing of megafacilities is expected to remain solid this year as many occupiers continue to build out their e-commerce operations and sustain their inventory levels,” said John Morris, president of Americas Industrial & Logistics for CBRE, in a statement. “Strong demand for megawarehousing centers is expected to continue in 2023 and a large number of construction completions will provide more opportunities for expansion.”

James Breeze, Senior Director and Global Head of Industrial & Logistics Research, said that there are various drivers for the ongoing increase in the development of these megawarehouses.

“The U.S. industrial market has an overall vacancy rate of 3%,” said Breeze. “This under-supply combined with occupiers looking for modern building design to service growing e-commerce sales, a higher use of automation and key amenities to retain employees in a tight environment is leading to strong demand for first-generation space.”

The CBRE executive noted that the level of growth in 2022 was expected, saying that developers take notice of demand and corresponding positive fundamentals like low vacancies and record rent growth and followed suit with significant groundbreakings.

As for how things may play out in 2023, Breeze does not expect current growth levels to remain fully intact.  

“The current economic environment is leading to lenders to put a pause on construction loans,” he said. “This is going to lead to a significant decline in construction starts in 2023. While this will not affect first-generation supply in 2023 due to record ongoing development, we could see an under-supply of first- generation space hitting the market in late 2024.”

When asked about the biggest benefits of these facilities for the occupiers, from a logistics and supply chain perspective, Breeze cited modern building amenities for today’s distribution, including high clear heights, more dock high doors and build outs for increased automation and employee comfort.


Article Topics

News
Logistics
3PL
E-commerce
Transportation
Warehouse
Warehouse/DC
3PL
CBRE
E-commerce
Industrial Real Estate
Logistics
Logistics Trends
Megawarehouses
Supply Chain
Transportation
Warehouse
WarehouseDC
Warehouses
   All topics

CBRE News & Resources

CBRE research points to a decrease in 1 million square-feet industrial lease signings in the first half of 2023
CBRE Q1 data points to the staying power of the U.S. industrial real estate market
“Megawarehouse” demand hits record highs in 2022, reports CBRE
Forum Mobility heralds $400M joint venture with CBRE IM and Series A funding round
CBRE research highlights industrial real estate rate gains near major airports
North American ‘big box’ transactions continue to gain traction, reports CBRE
CBRE report points to elevated levels of tight industrial vacancies and steep rents
More CBRE

Latest in Logistics

Uber Freight heralds various new customer-focused supply chain technology offerings
U.S. rail carload and intermodal volumes are up, for week of September 23, reports AAR
FTR Shipper Conditions Index takes a step back, from June to July
Prologis and Home Depot leadership address the capabilities of AI for logistics
ShipStation report examines holiday season shopping preferences
UPS preps to acquire MNX Global Logistics
Prologis research paper examines impact of various technologies on logistics real estate efficiency
More Logistics

About the Author

Jeff Berman's avatar
Jeff Berman
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review and is a contributor to Robotics 24/7. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis.
Follow Modern Materials Handling on FaceBook

Subscribe to Logistics Management Magazine

Subscribe today!
Not a subscriber? Sign up today!
Subscribe today. It's FREE.
Find out what the world's most innovative companies are doing to improve productivity in their plants and distribution centers.
Start your FREE subscription today.

September 2023 Logistics Management

September 6, 2023 · Logistics operations are facing a human capital crisis that poses a threat to both performance and competitiveness. In this year’s study, our authors explore how organizations can compete for talent in an increasingly limited talent pool; how organizations are competing in an increasingly dynamic business environment; and examine the technologies that shippers now need to use to stay ahead of the curve.

Latest Resources

Do More with the Same in Logistics and Distribution
Download this new white paper to learn best-practice strategies that can help your company do more with the same — optimizing your workforce to weather the current economic climate and pave a successful path forward.
Managing Global Complexity for the Long Term
Motor Freight Special Issue: Finding a way back to “normal”
More resources

Latest Resources

Driving ROI with Better Routing, Scheduling and Fleet Management
Driving ROI with Better Routing, Scheduling and Fleet Management
Improve efficiency and drive ROI with better vehicle routing, scheduling and fleet management solutions. Download our report to find out how.
Your Road Guide to Worry-Free Shipping Between the U.S. and Canada
Your Road Guide to Worry-Free Shipping Between the U.S. and Canada
Get expert guidance and best practices to help you navigate the cross-border shipping process with ease. Download our free white paper today!

Warehouse/DC Automation & Technology: It’s “go time” for investment
Warehouse/DC Automation & Technology: It’s “go time” for investment
In our latest Special Digital Issue, Logistics Management has curated several feature stories that neatly encapsulate the rise of automated systems and...
Why accurate, real-time location data is a must for efficient operations
Why accurate, real-time location data is a must for efficient operations
Find out how next-generation workforce management apps use accurate, real-time location data to power successful operations in this webinar with Radar CEO...
Should you lease or buy your lift truck fleet?
Should you lease or buy your lift truck fleet?
Leasing critical equipment like lift trucks can offer flexibility, but some lease terms can be complex and costly if you’re not...