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April 13, 2021
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Industrial Properties Command Rent Premiums in U.S. Airport Markets as Distribution Firms Prioritize Delivery Speed

3/19/21

This report was provided by CBRE

Distribution firms want to be close to major air hubs to expedite speedy deliveries, but there is often a price to pay: Industrial rent premiums average 13% in the top U.S. airport submarkets and reach as high as 47% in the Chicago O’Hare submarket, according to CBRE.

In the era of next-day delivery, third-party logistics firms, ecommerce companies and retailers are all vying for industrial space with proximity to major airports. Operators appear willing to pay a premium for this coveted, but limited, real estate to meet customer expectations of rapid order fulfillment.

The top airport submarkets by cargo volume garner rents above the local market average, according to new CBRE research. Los Angeles County’s South Bay and the Inland Empire’s Ontario submarkets are among the top 11 with substantial premiums at 12.9% and 12.2%, respectively. Third-party logistics firms are the main drivers of this activity, accounting for 29.6% of activity in major airport submarkets, followed by general retail and wholesale (24.4%) and pure-play e-commerce-only companies (16%).

“Speed has become a major competitive advantage for e-tailers,” said Executive Managing Director and Pacific Southwestern industrial & logistics market leader, Kurt Strasmann. “Being closer to the end user and therefore faster in servicing them has a big impact on market share. The result is that firms are willing to pay an often substantial premium to obtain this advantage. Industrial product adjacent to air cargo and port hubs will therefore continue to receive the benefit of increased pricing especially in submarkets servicing such significant metros as Greater L.A.”




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