Ever-increasing online sales fuel industrial-building boom
Published 12:00 am Sunday, July 1, 2018
DALLAS — For every $1 billion in digital retail sales, shipping requirements gobble up more than 1.2 million square feet of warehouse space, CBRE Group’s head of industrial research David Egan said.
Egan credits online retailing with fueling one of the biggest U.S. industrial building and leasing booms on record.
“We are seeing on average 50 million square feet of extra demand a year in the market than history says we should be seeing,” Egan said. “This has been going on now for almost six years.”
Just how much warehouse and shipping space the e-commerce firms have occupied is impossible to determine, Egan told members of the National Association of Real Estate Editors.
“It’s hard to really get to the bottom of what people are doing,” he said. “No one tells us what is happening inside that building when we do the lease.”
But Egan is sure that the digital retailing boom is responsible for the record-high rents and record-low vacancy in the country’s industrial property market.
“We are in rarified air here,” he said.
More than 20 million square feet of industrial space is being built in the Dallas-Fort Worth area — one of the largest warehouse development pipelines in the country.
“In 2013 or so we started to see a lot more demand for logistics space in the market than GDP would call for,” Egan said.
Egan predicts that e-commerce firms will continue to scramble for shipping and distribution space and may turn to nontraditional locations including vacant big box stores to meet their needs.
“We are going to see more and more space to support those sales, even if the broader economy goes down,” he said. “It can almost be counted on.”