In late 2009, the United States emerged from the great recession, the largest economic downturn since the great depression. Businesses began expanding, people slowly started going back to work and by mid-2010, demand for goods started to increase the need for new warehouse development. Around the same time, e-commerce began to boom, as a large part of the country started buying products online.
This shift to e-commerce created a need for new distribution centers with modern amenities to handle the more complex e-commerce logistics model. The combination of improved economic fundamentals and the advent of e-commerce have created an unprecedented amount of industrial development in the U.S. since 2010, with more than 935 million square feet recently completed, representing more than 6% of the U.S. industrial inventory. The Dallas–Fort Worth market accounts for nearly 10% of that development with just over 92 million square feet completed, the most in the U.S. Dallas–Fort Worth’s central location. The plethora of available land, a booming economy, growing population and expanding logistics advantages are the main drivers for the development boom.
While Dallas-Fort Worth leads the nation, California’s Inland Empire comes in a close second with more than 91 million square feet. The Inland Empire has completed the most new inventory when compared to its existing inventory, as 18.5% of its total stock was completed since 2010. Development is strong in core markets including Houston, Atlanta, Philadelphia and Chicago, but in the past few years there has been a significant increase in new construction in secondary markets near large population centers and/or inland seaports. Since 2010, the Greater Phoenix area, Indianapolis, Kansas City and Columbus have all completed more than 10% of each market’s current existing inventory.
The chart below displays the top 20 markets for new development since 2010. As we look ahead, expect core markets to continue robust new development due to continued insatiable demand from retailers, wholesalers and third-party logistics companies. Secondary markets will see the highest percent growth in new development, however, as both landlords and occupiers look to make use of these markets logistics advantages and affordable rents.
% of Total Inventory
Northern-Central New Jersey
Los Angeles County
James Breeze is National Director of Industrial Research for Colliers International in the United States. Based in the Greater Los Angeles area, he prepares quarterly and specialized industrial research reports and interprets trends and data across the country.