The positive impact of E-commerce for warehouses – The Property Chronicle
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The positive impact of E-commerce for warehouses How the digital age of business has increased need for warehouses and distribution centres in the US and beyond

The Analyst

New home under construction with sunlight coming through the rafters

The market for warehouses and distribution centers in the U.S. and elsewhere is on an incredible, multiyear run. Don’t expect that to abate any time soon.

The primary reason that this market has so much momentum remaining: E-commerce has caused a structural change in the market rather than a cyclical one. The market’s floor has risen significantly because so many goods now are purchased online and shipped directly to homes that previously took different routes.

E-commerce’s impact on the U.S. warehouse-and-DC space, which we at CBRE call the Industrial & Logistics market, is arguably historic. Average asking rents for U.S. warehouses have risen for 25 consecutive quarters. Net demand for warehouse space has remained positive for 31 consecutive quarters, a record streak. Availability of warehouses for lease is near its lowest point since 2000.

Meanwhile, the physical structure of warehouses has changed dramatically to accommodate e-commerce. They’re larger to facilitate a faster throughput of more goods. CBRE research found that the average size of newly built warehouses in the U.S. has more than doubled to roughly 185,000 sq. ft. (nearly 17,200 sq. m.) in the past 15 years.

Much of that increase is due to a proliferation of megawarehouses of 1 million sq. ft. (93,000 sq. m.) or more. These “big bombers” often are constructed past the edge of major metropolitan areas, putting them within a one-day drive of hundreds of thousands, if not millions, of people in multiple markets. Hotbeds for construction of these megawarehouses include eastern Pennsylvania, California’s Inland Empire and the Dallas-Fort Worth market in Texas.

The Analyst

About Adam Mullen

Adam Mullen

Adam Mullen leads the Industrial & Logistics business in the Americas for CBRE, the worldwide leader in commercial real estate services. In that role, he manages and supports CBRE’s supply chain and logistics business in the U.S., Canada and Latin America. Mr. Mullen oversees an organization of more than 800 professionals who handled more than $35 billion in industrial transactions in 2017 while focusing on delivering exceptional outcomes to both occupiers and investors. Mr. Mullen joined CBRE in 2014 to lead its supply chain business, steadily adding responsibilities until, in 2016, CBRE appointed him to oversee its Americas Industrial & Logistics line of business. Prior to joining CBRE, Mr. Mullen spent almost 10 years in the supply chain consulting industry, advising on design and implementation of supply chain change for many of the world’s top brands across multiple industries. Follow him on Twitter at @adampmullen.

Articles by Adam Mullen

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