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3/30/21
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This report was provided by CBRE
The top North American markets for large warehouses (200k sf or larger) saw record transaction activity in 2020, with the total number rising 25%, according to CBRE. The surge in leasing activity was fueled by pandemic-driven growth in online shopping.
CBRE’s report examined 22 markets with more than 75 msf of big-box facilities. In total, big-box transactions accounted for 349 msf of activity in these markets, up nearly 25% from 280 msf in 2019.
E-commerce-only users accounted for 27.1% of big-box transactions by square footage, followed by third-party logistics (25.8%) and general retail and wholesalers (24.7%).
The average vacancy rate for big-box industrial space in these markets ended 2020 at 4.6%, down from 5.2% at year-end 2019. Toronto had the lowest vacancy rate in this category at a microscopic 0.3 percent.
California’s Inland Empire led all markets with 42.5 msf in transactions, followed by Southern New Jersey and Eastern Pennsylvania (41.8) and Chicago (41.1). Phoenix had the highest percentage of its overall inventory absorbed in 2020 (9.1%).
Demand was driven by 3PLs, which accounted for 34.5% of the total deals in 2020. Transaction activity increased by 21% year-over-year in 2020 and net absorption increased by 40% to 25.1 million sq. ft.
The large population gives the Inland Empire one of the largest big-box industrial labor forces in the country. More than 100,000 people are employed in the warehouse industry, according to CBRE Labor Analytics. This is expected to grow 25% by 2030.
“The Inland Empire is the single largest Class A industrial market in the U.S. with an abundance of Fortune 500 companies moving goods through the Ports of LA and Long Beach to the south western part of our country,” said Ontario-based CBRE Executive Vice President Dan De La Paz. “Historically, this market has developed 15-25 msf of new space each year, now this market is maturing and running out of land, thus accelerating industrial real estate values at the fastest pace ever seen.”
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