DEMAND FOR WAREHOUSING TO OUTSTRIP SUPPLY IN THE U.S., E-TAIL AND E-COMMERCE THE KEY DRIVERS

The rising popularity of online stores and e-commerce platforms, along with a healthy demand from every industry segment has been driving the demand for large warehouses across the U.S.

Over the last four years, the construction of new “big box” warehouses multiplied six-fold and by the end of 2015, it touched a total of 61 million sq.ft. The increased pressure to deliver goods quickly, has resulted in more warehouses being planned near port and rail lines to make use of multiple modes of transportation.

In the past four years, the rentals have increased by up to six times. The average rent per sq. ft. in the U.S. is estimated to be around $ 4.5 to 4.75 with higher rentals in demand focused regions. A primary factor contributing to this spike in rentals is that nearly 93 percent of the built space remain occupied. And, based on the demand, even the third-party logistics (3PLs) providers and the fourth-party logistics (4PLs) providers are expanding their capacities across the U.S.

Retailers such as Home Depot Inc., Target Corp. and Wal-Mart Stores Inc., have already built huge fulfillment centers. In addition, 17 million sq. ft. of new big-box construction is currently underway around demand centers such as Los Angeles, Eastern Pennsylvania & New Jersey.

Retailers are also looking at smaller warehouses to manage one-hour delivery with support from the mega distribution centers. Amazon is leading this trend using warehouses under 200,000 sq. ft. in high population urban zones. The consumer shift from buy-in stores to online shopping will continue be a major trend elevating the demand for warehouses.