Million-sq.-ft. warehouses deals fell by a third in 2023's first half due to economic concerns.
The nation's big retailers are also the biggest renters when it comes to warehouse space.
Million-sq.-ft. warehouse lease signings declined in the first half of this year after new construction ramped up in 2022, but national retail chains remained the most active renters.
The average size of the top 100 industrial lease transactions in 2023 was 789,471 sq. ft.--well below last year’s 926,683 average, according to CBRE’s H1 industrial leasing report. The reason, said analysts at the global real estate services company, was that economic uncertainty led more and more occupiers to renew current leases rather than signing new ones.
General retail and wholesale companies remained the biggest acquirers of new space. They signed 34 of the top 100 deals done so far this year, just a few bottom-line signatures below the 37 they inscribed during 2023’s first half.
The signing of million-sq.-ft. leases declined by a third, leading to an overall 16% decrease in total industrial space leased in 2023 to 373 million sq. ft.
Retailers were closely followed in their continued pursuit of warehouse space by third-party logistics companies, which signed 33 of the biggest deals. Automobile, tires, and parts dealers accounted for nine of the new leases.
E-commerce retailers inked just seven of the biggest leases, half of the number they signed last year.
Chicago led all markets with 11 of the top 100 leases, followed by Dallas-Ft. Worth, California’s Inland Empire, and Pennsylvania’s I-78/81 Corridor—each with nine. The Midwest had a strong showing in H1 2023, accounting for 40 of the top 100 transactions, with Columbus (eight) and Indianapolis (seven) also among the most active market rankings. Chicago tied with Inland Empire and PA I78/81 Corridor for the most million-sq.-ft. transactions at four.
CBRE’s research department expressed that the pandemic-induced demand boom for million-sq.-ft.-plus facilities appears to have ended. It does, however, expect that average lease sizes will remain above pre-COVID levels.
CBRE also noted that a diverse tenant set that includes food-and-beverage operators, construction companies, automobile dealers, and 3PLs likely will remain active--especially in Midwestern markets with enough available space to satisfy their demands.