"The last mile in the e-commerce delivery process looks like a windfall for real-estate owners.
Industrial properties in general have enjoyed strong rent growth and record-low vacancies during the pandemic. An increase in online shopping has furthered the trend, creating greater demand for warehouses to hold ordered items.
Retailers especially covet space near highly populated areas where online orders can be loaded onto trucks and vans for local delivery to their final destinations. Retailers face a scarcity of final-stage warehouses near major cities; and as more companies promise same-day or even two-hour arrivals, such space is rising in demand and value.
More than half of U.S. industrial leasing in the third quarter involved users looking for space of less than 100,000 square feet, often a mark of a last-mile facility, according to a report from real-estate firm Jones Lang LaSalle Inc.
Other signs point to greater last-mile interest in major metro areas. While there has been a 15% increase in the hiring of light-truck drivers in the U.S. since 2019, the four boroughs of New York City outside Manhattan have seen a 24% increase over the same period, according to industry data analyzed by JLL. The real-estate firm said that reflected strong last-mile demand in prime urban cores.
Overall, industrial rents in the third quarter were up 7.1% from a year earlier while vacancy rates dropped to a new low of 4.3%, according to JLL. In areas like Los Angeles and New Jersey, industrial vacancy rates are below 2%.
"Space in our markets is effectively sold out," said Thomas Olinger, chief financial officer of large industrial landlord Prologis, during an October earnings call. Prologis owns warehouses in most major U.S. markets, including New York, Los Angeles, and Houston.
In their rush to meet the growing demand for last-mile space, developers face challenges. For one, much of the eligible land for industrial projects near cities is being converted to other uses, such as residential apartments or hotels. And as warehouses move closer to residential areas, a public backlash against the presence of delivery infrastructure has arisen.
"The customers want to have things delivered to home," said Craig Meyer, president of JLL's industrial brokerage division for the Americas. "The flip side is they don't want trucks driving up and down the residential streets all day long emitting diesel fumes."
Still, builders are finding creative ways to add last-mile space near city centers.
In Seattle, industrial developer Ryan Companies -- whose tenants include manufacturers like Polaris Inc. and retailers like Whole Foods -- is building a last-mile facility one mile south of downtown along with investor GTIS Partners.
Because of space constraints, the project entails building vertically -- up to four floors -- to more easily fit into an urban environment. The company hopes to lease the space to as many as four companies needing a local hub for daily delivery.
"The pandemic advanced us 10 years in the e-commerce business model," said Bret Jordan, president of the northwest region for Ryan Companies. "So really, we're trying to respond to conditions that we were expecting to show up in 2030."” [1]
1. Business News: 'Last Mile' Warehouse Space Sees Strong Demand
Parker, Will. Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 01 Dec 2021: B.7.
Komentarų nėra:
Rašyti komentarą