Bigger and Bolder: Large Warehouse Leases Fueled US Industrial & Logistics Market in 1H 2022

Megawarehouses are in style – in a big way, according to a new report from CBRE. Warehouse users signed leases for 37 facilities of 1 million sq. ft. or larger in the U.S. in the first half of this year, up from 24 in the first half of 2021.

This was a key finding in CBRE’s analysis of the 100 largest industrial & logistics leases cinched in this year’s first half. Overall, the average size of the 100 largest leases edged close to seven digits – 931,860 sq. ft., up from 800,149 a year ago.

California’s Inland Empire tied with Savannah, Georgia, as the fourth-leading market for large industrial leases. The Inland Empire claimed seven of the 100 largest, totaling 7.4 million sq. ft.

“The demand for 1 million sq. ft. or larger warehouses in the Inland Empire is driven primarily by Fortune 500 retailers and third-party logistics companies, many of which are adapting their supply chains to add extra capacity and meet their e-commerce needs. As we are still in the early stages of this supply chain strategy modernization, the trend for megawarehouses is likely to persist, especially in the Inland Empire. The Ports of Los Angeles and Long Beach remain the best in the nation for delivering imported goods from Asia quickly and inexpensively. The only headwind will be a lack of supply in the core part of the market, which will push development north and east,” said Dan de la Paz, executive vice president, SIOR, CBRE.

                  Leading Markets For Top-100 Industrial Leases in First Half 2022

Market	# of Leases	SF of Those Leases	Market	# of Leases	SF of Those Leases
Atlanta	12	10.3M	Dallas/Ft. Worth	6	5M
Chicago	11	8.9M	Phoenix	4	4.2M
Indianapolis	9	7.3M	Central Valley	4	4.1M
Inland Empire	7	7.4M	PA I78/81 Corridor	4	3.8M
Savannah	7	7.4M	Memphis	4	3M

The activity points to expansion in the industry, particularly for traditional retailers and wholesalers. Eighty-five of the top 100 leases are new leases rather than renewals. Traditional retailers and wholesalers accounted for the largest share – 40 leases. Runner up: Third-party logistics firms at 30 leases.

“The industrial & logistics market preformed solidly in the first half of the year despite headwinds challenging the broader economy,” said John Morris, CBRE’s President of Industrial & Logistics in the Americas. “We have seen a falloff in leasing by smaller users – those in 25,000 sq. ft. of less – likely due to the economic environment. But the largest users are forging ahead, picking up most of the slack.”

To read the full report, click here.