Occupier Activity Remains Strong Thanks to 3PL and E-commerce Transactions

by | 13 June 2018

Occupier activity across the United States continues to be robust, particularly in bulk industrial space defined as 100,000 square feet and larger. Over the past 12 months (June 1, 2017 to June 1, 2018) 1,184 industrial (warehouse, manufacturing, flex) transactions (new lease, user sales, renewals) have signed in spaces 100,000 square feet and larger, totaling 305 million square feet. This is only slightly lower than the 1,255 transactions signed in the 12 months prior, totaling 331 million square feet. The average size of a bulk transaction remained nearly the same, at 261,000 square feet, only slightly lower than the 264,000 square feet average the previous year.

While e-commerce continues to get all the press, the top occupier of industrial space remains third-party logistics and packaging companies (3PLs) who signed nearly 72 million square feet of bulk industrial deals the past 12 months, 23% of the total transactions signed. 3PLs remain the top occupier of bulk industrial space because most every retailer and wholesaler industry needs their services. The top 3PL occupier the past 12 months was XPO Logistics, who signed transactions totaling 4.8 million square feet the past 12 months.

E-commerce finished second for transactions the past 12 months at 51 million square feet, 17% of the total volume the past year. E-commerce occupiers continue to need buildings much larger than other occupier types, as the average e-commerce transaction the past year totaled 510,480 square feet, nearly double the overall average transaction size for a bulk industrial building. For the fourth consecutive year, Amazon.com was the top e-commerce and overall occupier of industrial space, signing 42 transactions totaling nearly 29 million square feet. One of the markets of choice, on a square foot basis, for the past 12 months for Amazon.com and many other e-commerce occupiers was California’s Inland Empire, a top reason why the most e-commerce transactions (28.9%) were signed in the western region of the U.S.

Average Transaction Size by IndustryAverage Size (SF)
E-commerce 510,840
Furniture and Appliances 320,898
Courier and Trucking Services 272,331
Construction, Improvement and Home Repair 262,946
Motor Vehicles, Tires and Parts 258,737
General Retail and Wholesale 245,990
Food and Beverage 234,224
Third-Party Logistics and Packaging 227,740
Manufacturing 202,628
Data Centers/Tech/Engineering 198,537

The southern U.S. remained the top region of choice for bulk industrial occupiers, as seven of the ten industries highlighted in this report signed the most space in the region. Occupiers continue to move into the market in droves because of the region’s growing population and significant logistics advantages. At the time of this report, over 111 million people lived in the southern region, the most of any region in the country, and this is expected to grow by a nation-leading 6.4% over the next five years.

Product TypeRegion% Transacted
Construction, Improvement and Home RepairSouth54.6%
Courier and Trucking ServicesSouth40.0%
Data Centers/Tech/EngineeringSouth42.1%
Food and BeverageMidwest36.0%
Furniture and AppliancesSouth42.2%
General Retail and WholesaleSouth28.9%
Motor Vehicles, Tires and PartsSouth41.4%
Third-Party Logistics and PackagingSouth33.0%

While the south region led in most categories, for bulk manufacturing space, it was the Midwest that signed the most transactions. Manufacturing occupiers continue to expand within the U.S. because of a multitude of factors including increased international transportation costs, newly instituted government policies and the good PR that goes with “Made in the USA”. The Midwest is taking advantage of the manufacturing growth because of its educated workforce and pro-business policies in many states. The past 12 months, over 35 million square feet of industrial bulk space transactions were signed by manufacturers, a 5.2% increase compared with the previous 12 months. Of these transactions, 33.7% were signed in the Midwest.

Transaction volume for bulk industrial space will remain robust over the next 12 months. Occupiers’ increasing need for “final-mile” distribution centers, combined with low vacancies in larger big-box facilities, will continue to lower the average transaction size in the coming months. While 3PL and e-commerce volume will remain robust, look for strong growth in the food and beverage industry, as many of these occupiers are looking to expand and modernize its distribution and manufacturing networks. Population growth will keep occupiers in all industries looking at space in the southern and western portions of the U.S. while improvements and expansions of inland and coastal logistics hubs in the Northeast and Midwest will keep demand strong in these regions for the foreseeable future.

Top Industries by Square FeetSquare Feet Signed
Third-Party Logistics and Packaging 71,510,558
E-commerce 51,048,049
General Retail and Wholesale 37,144,534
Manufacturing 35,159,884
Food and Beverage 25,505,828
Courier and Trucking Services 23,182,159
Construction, Improvement and Home Repair 18,503,771
Motor Vehicles, Tires and Parts 17,562,617
Furniture and Appliances 16,365,783
Data Centers/Tech/Engineering 9,132,732

Company Type Description:

  1. Construction, Improvement and Home Repair – Warehousing and distribution of materials used in residential and commercial construction, improvements and repair.
  2. Courier and Trucking Services – Warehousing and distribution of products shipped directly by ground, sea and air couriers and trucking companies.
  3. Data Centers/Tech/Engineering – The use of industrial space for data centers, research and development purposes.
  4. E-commerce – Warehousing and distribution of product that is primarily ordered online and shipped directly to the end consumer.
  5. Food and Beverage – Manufacturing, warehousing and/or distribution of food and beverage related products. Could contain some e-commerce or manufacturing components.
  6. Furniture and Appliances – Warehousing and distribution of retail and/or wholesale furniture and appliance products. Could contain some e-commerce and or manufacturing components.
  7. General Retail and Wholesale – The warehousing and distribution of retail and/or wholesale products not listed in any of the other categories. Could contain some e-commerce or manufacturing components.
  8. Manufacturing – Industrial space used for manufacturing and/or storage of raw materials and equipment used in the manufacturing of non-automobile related products.
  9. Motor Vehicles, Tires and Parts – The warehousing, manufacturing and/or distribution of motor vehicles, tires and related parts and materials.
  10. Third-Party Logistics and Packaging – Third-party logistics (3PL) and packaging of a wide variety of products.

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