2024 Sees Rise in Mega Distribution Center Leasing Activity

The industrial real estate market saw a significant increase in leases of 1 million sq. ft. or more in 2024, according to a new report from CBRE analyzing last year’s 100 largest industrial & logistics leases.

Occupiers signed leases for 49 such mega distribution centers last year, up from 43 in 2023. The 2023 total marked the first decline in the number of mega distribution center leases, which grew sharply during the pandemic and peaked at 61 in 2022.

Despite last year’s increase in mega distribution center leases, the average size of the largest 100 industrial leases fell slightly to 968,000 sq. ft. from 987,000 sq. ft. in 2023.

Forty of the largest 100 leases were renewals, up from 30 in 2023. The increase in renewals reflected economic uncertainty, prompting many major occupiers to take a wait-and-see approach to their leasing strategies.

“The rise in lease renewals underscores a strategic shift in the market,” said John Morris, president of Americas Industrial & Logistics at CBRE. “Companies are more frequently prioritizing stability and efficiency by extending their current leases in established logistics hubs.”

Traditional retailers and wholesalers increased their share of the top 100 leases to 38% from 30%. Conversely, the food & beverage, automotive and building materials sectors accounted for fewer of this year's top 100 leases than they did in 2023.

Notably, building materials suppliers and electric vehicle manufacturers were also significantly less active than in 2023, allowing retailers and wholesalers to claim a larger share.

Activity from third-party logistics operators (3PLs) accounted for one fewer lease among the top 100 (28 in total) than it did in 2023. Nevertheless, the 2024 total was well above the 15 leases in 2020 and 18 in 2022, underscoring the increasing reliance of big industrial users on 3PLs to manage their logistics.

Established markets like the Inland Empire, PA I-78/81 Corridor and Dallas-Fort Worth saw the largest number of mega-leases across the country.