Report: Warehouse rents spiking due to e-commerce growth
E-commerce growth and omnichannel efforts are pushing up demand (and prices) for prime warehouses in the U.S., especially those closer to city centers that make speedier delivery more possible, according to real-estate brokerage firm CBRE Inc. CBRE considers industrial sites of greater than 100,000 square feet built for modern fulfillment needs to be “prime.”
Rents for prime warehouse space in the U.S. rose 9.9% in 2015, well past the 2.8% increase in the global industrial leasing rate. Six markets in particular were among the nine with the biggest increases globally, with Oakland (29.8%) topping the increases seen in also-hot Northern New Jersey, according to the report.
CBRE expects the trend to continue this year, with warehouse rents rising another 6% in the most in-demand markets.
Retailers are already feeling the pinch of lower-margin e-commerce as they boost their e-commerce and omnichannel efforts. But as they work to streamline their logistics, and as same-day delivery startups work to scale their operations, many of the costs will continue to go up, as seen in this report on warehouse rents.
That could put yet another kink in the same-day delivery boom, which, at least for some startups, is beginning to deflate a bit in the face of ebbing venture capital interest. The massive rent increases measured by CBRE are in the areas most heavily served by same-day delivery companies, and it’s not clear how much wiggle room delivery startups—or even Amazon—have in the facing of such rapidly and steeply rising costs.
“There are huge premiums being placed right now on being close to the consumer—speed of service, speed of delivery is a critical component of why people choose to buy from one retailer over another,” David Egan, CBRE’s head of industrial and logistics research for the Americas, told the Wall Street Journal. “To get the goods to consumers fast, you have to get close to them.”
- Wall Street Journal E-Commerce Drives Surge in U.S. Warehouse Rental Prices
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