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E-Commerce's Burgeoning Byproduct: Megawarehouses


2/9/2017

The rapid growth of e-commerce has created a big trend in U.S. industrial markets: a proliferation of warehouses spanning 1 million sq. ft. or larger.

The massive warehouses and distribution centers have sprouted from Southern California to Philadelphia, clustering around metro areas that provide the mix of road, rail and sea access that e-commerce users covet, according to a new report from CBRE Group, Inc.

All told, 117 such facilities were built across the U.S. from 2010 to 2016 for a total of 141.2 million sq. ft., which shows an increase from the 99 facilities built between 2003 and 2009, according to CBRE. The markets in which the most big-box construction occurred in the 2010-2016 timeframe are led by Philadelphia, California’s Inland Empire and Dallas/Fort Worth.

Top Markets For 1 Million-Sq.-Ft. Warehouses Built 2010-2016:
 

Rank Market Number of Buildings Total Sq. Ft. (millions)
1 Philadelphia 16 19.7
2 Inland Empire 13 15.4
3 Dallas/Fort Worth 13 14.7
4 Atlanta 12 13.8
5 Chicago 9 11.7
6 Memphis 3 4.1
7 Columbus 3 3.4
8 Cincinnati 2 3.3
9 Indianapolis 2 2.2
10 Phoenix 1 1.2



Looking ahead, the busiest markets for on-going construction of 1 million-sq.-ft. warehouses are led by the Inland Empire, Chicago, Philadelphia and Atlanta. Across the 10 busiest U.S. markets for this type of construction, 29 such facilities are underway.

“The spread of these big-box facilities tells us several things,” said David Egan, CBRE’s Head of Industrial & Logistics Research in the Americas. “Primarily, it underscores the rapid growth of e-commerce, since these megafacilities serve as the backbone of retailers’ fulfillment networks, distributing goods across multistate regions.

“Additionally, developers prefer to build these big boxes in industrial-powerhouse metros that offer the best combination of exceptional transportation access and close proximity to big populations favored by e-commerce users,” he said.

While massive warehouses aren’t purely a phenomenon of e-commerce, the two are closely related. E-commerce users typically need two to three times the amount of warehouse and distribution space that traditional users do. That’s mostly because e-commerce fulfillment requires more inventory, labor and automation.

To view the report, click here.