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3PLs replace retailers as the nation’s largest leasers of warehouse space

Al Urbanski
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A record 455 million sq. ft. of warehouse space is under construction this year.

Last year, third-party logistics providers accounted for 41% of all big-box (minimum 200,000 sq. ft.) warehouse lease transactions, making them industrial real estate’s top tenant for the first time since CBRE started keeping score 10 years ago.

The previous market leaders—retailers and wholesalers—dropped to second place with a 35.8% share. Food and beverage occupiers ranked third with 8.7%.

“During the pandemic, companies relied on partnerships with 3PLs to stabilize their operations and accommodate demand,” said John Morris, CBRE’s president of Americas Industrial & Logistics. “The initial thought was that companies would eventually return to self-reliance for their fulfillment needs, but more companies have since realized that 3PLs can play a vital role in their business models, and demand is stronger than ever.”

Last year’s vacancy rate at big-box industrial facilities was a slim 3.3%, matching the record-low mark set in 2021. The space race set off by the 3PLs drove up first-year rents by 23%, and a record 455 million sq. ft. is now under construction—a quarter of it already leased.

Morris observed that such robust construction should result in higher industrial vacancy rates, but predicted that building will moderate this year with financing remaining tight.

“That should lead to double-digit rent growth as construction deliveries slow,” he said.

3PLs typically operate companies’ logistics and warehousing operations on a contractual basis, gaining efficiencies by handling that work for multiple clients simultaneously. As a result of enduring pandemic-era shifts, companies have expanded their reliance on 3PL partners to create resilient supply chains and economically address customer needs.

Last year’s Top 10 industrial space markets, according to CBRE were…

 

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