Mega-logistics warehouse rental activity accelerated in the first half, although a key customer category – e-commerce – did not join the party.
Warehouse users signed leases for 37 facilities of 1 million square feet or more through June, up from 24 facilities in the first half of 2021, according to data from real estate services giant CBRE Group Inc. (NYSE: CBRE).
Appetite for big-box space remained strong, with the average size of the top 100 warehouse leases reaching 931,860 square feet, up from 800,149 for the 2021 period, according to CBRE data. Of the top 100 leases, 85 were new contracts rather than renewals, a barometer of widening expansion, CBRE said.
Atlanta was the top market for the top 100 leases, with leases signed for 12 facilities. It was followed by Chicago (11), Indianapolis (nine) and Inland Empire of California and Savannah, Georgia (seven each), according to CBRE data.
The most striking change over the past two years has been the dramatic decline in big-box facilities rented by pure e-commerce users. E-tailers signed mega-leases for just 12 installations in the first half of 2022, CBRE said. This compared to 32 in the first half of 2021 and 35 in the first half of 2020 when the pandemic caused e-commerce demand to skyrocket.
The drop in rental activity in the first half of 2022 was due to a pullback from large e-commerce companies, according to Kris Hudson, a spokesperson for CBRE.
The largest year-over-year increase occurred in the general retail and wholesale trade category. This segment led the pack in H1 with 40 mega-warehouse leases, compared to 32 in 2021 and 27 in 2020. Third-party logistics (3PL) providers signed leases for 30 mega-warehouses in H1 2022, compared to 24 in 2021.
Rental of smaller warehouses, defined as 25,000 square feet or less, declined in the first half due to the uncertain economic environment, according to data from CBRE. The small facilities category performed well in 2021 and early 2022 as developers and users struggled to secure large plots of land to erect large-area buildings.