Home delivery fuels the signing of a record number of million-sq.-ft. warehouse leases

Warehouse vacancies are low and rents are high, so retailers are signing leases for the biggest distribution center spaces they can find.

A record 37 signings for distribution center spaces of 1 million sq. ft. or more weighted the list of top 100 industrial leasing transactions in CBRE’s industrial real estate report for the first half of 2022. Just 15 of the 100 were renewals, indicating that tenants were expanding their total space.

Signings for spaces of a million-plus sq. ft. numbered just 24 in CBRE’s report on the first half of 2021.

It’s clear that increased consumer demand for product deliveries is what’s ignited this space race. The general retail and wholesale category took 40 of the biggest 100 leases, and third-party logistics companies signed another 30. Dedicated e-commerce operations accounted for 12.

Warehouses in the Atlanta and Chicago metros accounted for more than 20% of the top 100 transactions. Savannah tied the Inland Empire with seven, shining a light on Georgia’s largest port as an important new center of distribution. It claimed just two of last year’s largest space transactions.

The fact is that nearly all of the transactions on the list were in the million sq. ft. range. The average space leased among the top 100 was for 931,860 sq. ft.—a 14% increase over the average 800,149 sq. ft. space on the list in the first half of 2021.

CBRE predicts that million-sq.-ft.-plus industrial transactions will continue to rise in the coming year due to a large increase in the amount of warehouse construction.