Unprecedented Warehouse Demand in Cities Like Savannah: JLL



A robotic arm takes a cardboard box in a warehouse

onurdongel | E + | Getty Images

As retailers ramp up e-commerce operations and invest in faster delivery to customers, the appetite for warehouse space is skyrocketing, according to a new report.

Demand from mass merchandisers for logistics facilities to store inventory, pack and send online orders will be the highest ever this year, commercial real estate company JLL said.

JLL monitors deferred demand among large and low-cost retailers including Walmart, purpose, Large lots, TJX as well as Costco, they are all fighting for storage space. Some of these companies are trying to catch up Amazon, which for many years absorbed warehouses – large and small – in the central regions of the country. Recently, such buying and renting has spread to more densely populated areas, including New York.

“We’ve come a long way from in-store shopping to online shopping,” Craig Meyer, president of JLL’s US Manufacturing Division, said in an interview. “This is an existential driver of demand in the United States.”

Warehouse demand is growing

There are several key markets in the United States where businesses including third-party logistics providers such as UPS as well as FedEx – to face tougher competition for warehouse space.

Demand skyrocketed in Columbus, Ohio, JLL found, a market where, according to the company, nearly half of the country’s population is within a day’s drive. JLL predicts that industrial property demand in Columbus will grow 61% in 2021 compared to 2020, after growing 13.7% in the previous year.

Meanwhile, as ports on the Southern California coast experience large delays, warehouse requests are reaching unprecedented levels in Savannah, Georgia, JLL said. The report says that industrial property demand in the Savannah area has grown by nearly 10 million square feet over the past year.

“The cargo is moving to the east coast. And it went on for a while, but was aggravated by Covid again, ”Meyer said. “Many companies are striving to be the starting point now that [containers] get off the boat. “

According to separate data from real estate company CBRE, rents, which are the base rent paid by landlords and tenants, are growing faster than the asking rent. This is another sign of a hot market. According to CBRE, industrial rents in the first five months of 2021 rose 9.7% from the same period a year earlier. Asking rent for the same period increased by only 7.1%.

“We’ve seen giant leases, high-density leases signed in Brooklyn, Queens and markets around New York,” Meyer said. “And what is remarkable about them is that the rent is equal to the rent for an office building. Because being close to this cluster on this last mile is very important. ”

Prologis, the largest US logistics property owner and manager by square footage, sees a sharp gap between supply and demand.

“The momentum in the market is really high, and this is happening against the backdrop of very high shortages in our business,” said Chris Keyton, head of research group Prologis, in an interview. “The vacancy rate in the United States is four and a half percent, which is basically at least 40 years. There has never been less space available for rent at a time when customers really need it. ”


Source link