February 2, 2017

Developers building mega-warehouses to handle e-commerce volume, CBRE says

Pennsylvania, California, and Texas lead the pack in DCs spanning 1 million square feet or more.

By DC Velocity Staff

Driven by booming e-commerce sales volumes, developers are building an increasing number of mega-warehouses spanning 1 million square feet and above, with the Philadelphia and eastern Pennsylvania area leading the way, according to a report released today by real estate and logistics services company CBRE Inc.

The massive distribution centers are typically clustered around metro areas that provide a combination of proximity to consumer populations and access to road, rail, and sea transportation channels, David Egan, CBRE's head of industrial and logistics research in the Americas, said in a statement. After Philadelphia and eastern Pennsylvania, most big-box construction between 2010 and 2016 occurred in California's Inland Empire, Dallas/Fort Worth, Atlanta, Chicago, Memphis, Columbus, Cincinnati, Indianapolis, and Phoenix.

From 2010 to 2016, 117 such facilities were built, for a total of 141.2 million square feet. By contrast, 99 facilities were built between 2003 and 2009, according to CBRE. The trend shows no sign of slowing: 29 more facilities are currently under construction, the report said.

The key factor driving the trend is the need to house the sheer density of products flowing through online retail channels. As a result, e-commerce places much larger demands on warehouse space compared with other types of logistics operations. E-commerce users typically need two to three times the amount of warehouse and distribution space that traditional users do, because online fulfillment requires more inventory, labor, and automation, according to the study, "Thanks a million, mega industrial warehouses!"

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