Future Cities

2020 North America Industrial Big Box Review & Outlook


View of the Seattle skyline and the sound
The Puget Sound’s industrial market is among the strongest in the nation, with growth fueled by the e-commerce, energy and life sciences companies that is delivering above-average returns for investors. Building values, land prices and rents are steadily increasing.
John MillerSenior Managing Director

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More than 5 million people live within 50 miles of the urban core, with a 7.1% expected growth rate over the next five years—the highest of any major West Coast market. Nearly 12 million people live within 250 miles, with a 6.4% expected growth rate in five years. A total of 4.3 million households can be reached within 250 miles.

Figure 1: Seattle Population Analysis

Source: CBRE Location Intelligence.

According to CBRE Labor Analytics, the local warehouse labor force of nearly 77,000 is expected to grow by 13.5% over the next decade. Seattle has the highest non-supervisory wage of any market in this report at $17.12 per hour, 21.6% above the national average.

Figure 2: Seattle Warehouse & Storage Labor Fundamentals

Source: CBRE Labor Analytics.
*Median Wage (1 year experience); Non-Supervisory Warehouse Workers (forklift, warehouse workers).

Location Incentives

Over the past five years, there have been seven economic incentives deals totaling $1.8 million at an average of $1,644 per new job in the Seattle metropolitan area, according to Wavteq.

According to CBRE’s Location Incentives Group, the top incentive programs offered in metro Seattle is a sales/use tax exemption for machinery and equipment that is used directly in manufacturing, warehouse or research & development operations. Service charges rendered for installing, repairing, improving or cleaning the machinery and equipment are also exempt from sales tax.

Figure 3: Seattle Top Incentive Programs

Source: CBRE Location Incentives Group.
Note: The extent, if any, of state and local offerings depends on location and scope of the operation.

Logistics Driver

The Northwest Seaport Alliance, which includes the ports of Seattle and Tacoma, is the fifth largest container gateway in the U.S. The ports are less congested than their California counterparts and provide a shorter direct route to Asia. Union Pacific and BNSF rail lines link the ports to the Midwest.

Seattle-Tacoma International Airport is home to 24 air carriers and ranked 17th in North America for air cargo handled in 2019. Interstate 5 gives the region direct access to the entire West Coast.

Although sales volume fell in 2020, pricing remained stable with strong rent growth and a lack of available for-sale asserts. As available land for development is absorbed, markets like Fredrickson, DuPont, Lacey, Tumwater and Centralia are heating up. The Interstate 5 Corridor between Seattle and Portland is steadily filling in and expanding to northern points such as the Washington cities of Vancouver and Ridgefield. Increasing rental rates will put pressure on the market to expand its traditional boundaries to accommodate business growth.
Brett HartzellExecutive Vice President

Capital Markets

Figure 4: Cap Rate Comparison

Source: CBRE Research.

Supply & Demand

Despite another year of solid construction completions, the direct vacancy rate in the Seattle region dropped to 2.0% in 2020, with no vacancy for facilities of more than 750,000 sq. ft. Transaction volume nearly doubled year-over-year to 6.0 million sq. ft., much of it for facilities of less than 500,000 sq. ft. Construction completions totaled nearly 3.4 million sq. ft., down from 4.5 million sq. ft. in 2019. Another 3.3 million sq. ft. is currently under construction, 59.2% of it preleased.

E-commerce retailers accounted for nearly 45% of total transaction volume in 2020. Taking rents rose by 1.9% year-over-year to $7.08 per sq. ft. With extremely low vacancy and a high level of under-construction preleasing, it will be difficult for the market to match its 2020 transaction volume in 2021. Asking rents will continue to rise and developers will search for land to build on spec.

Figure 5: 2020 Occupier Transaction Market Share

Note: Includes transactions signed in 2020.
Source: CBRE Research.

Figure 6: Transaction Volume

Note: Includes new leases, renewals, and user sales transactions 200,000 sq. ft. and above.
Source: CBRE Research.

Figure 7: Big Box Year-Over-Year Comparison

Source: CBRE Research.

Figure 8: Under Construction vs. Preleased

Source: CBRE Research.

Figure 9: First Year Taking Rents (psf/yr)

Note: Includes first year taking rents for leases 200,000 sq. ft. and above.
Source: CBRE Research.

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2020 North America Industrial Big Box

This report provides an in-depth overview of supply-and-demand fundamentals, demographics, logistics drivers, labor and location incentives for the top 22 markets in North America.