St. Louis Named Top 10 Growth Market for Big-Box Industrial Sector in North America

St. Louis ranked 10th for top growth market in North America for large-warehouse leasing activity, with 5.8 percent of its inventory absorbed in 2021, according to a new report from CBRE.

Transactions for big-box warehouses – those of 200,000 sq. ft. or larger – hit new highs in 2021, as retailers added safety stock to limit supply chain disruptions and continued to meet online shopping demand. This category recorded 450 million sq. ft. of transactions in the top 23 North American markets last year, up significantly from 350 million sq. ft. in 2020. The study includes markets with more than 75 million square feet of big-box product.

The strong leasing activity and inventory absorption also resulted in St. Louis being named a top-10 market for direct vacancy rate with 3 percent, as the market saw 9 million sq. ft. of leasing activity in 2021, 67 percent higher than 2020.

“St. Louis’s central location provides quick access to a large portion of the U.S., making the region a desirable distribution hub,” said Jeff Kaiser, CBRE Senior Managing Director in St. Louis. “Facing a lack of land sites, developers are pursuing fringe sites to meet the continued tenant demand, particularly from e-commerce companies and consumer goods and 3PL’s. As the market tightens due to a lack of new supply, rents are expected to increase.”

Top Growth Markets	Growth Rate Percentage
Houston	11.1
Phoenix	10.5
Atlanta	7.5
Central Valley, CA	7.2
Columbus	7.1
Louisville	7.0
Southern NJ –Eastern Pennsylvania	6.9
Dallas-Fort Worth	6.8
Mexico City	6.4
St. Louis	5.8

*Growth rate is overall net absorption divided by existing inventory

National Trends

Chicago led all markets with 59.4 million sq. ft. in transactions, followed by Inland Empire (49.2) and Southern New Jersey – Eastern Pennsylvania (48.7).

General retailers and wholesalers led the way in transactions at 35.8 percent, followed by third-party logistics (32.2 percent) and last year’s leader, e-commerce-only users (10.7 percent). National vacancy rates in this category fell to a record-low 3.4 percent, down from 4.6 percent in 2020.

Construction completions were down slightly in 2021 at 186.7 million sq. ft., compared to 194.4 million sq. ft. the year prior. Some relief may be found in the construction pipeline, which is at a record 323.9 million sq. ft.

“Consistent construction completions will be essential for sustained transaction activity in 2022,” said James Breeze, Global Head of Industrial & Logistics Research for CBRE. “The demand is there, but supply is extremely tight. If projects are delayed due to lack of materials or slow delivery from supply chain challenges, occupiers will find it difficult to make big moves.”

To download the report, click here.