Executive Briefings

Demand for E-commerce Fulfillment Center Space Outstrips Supply

Continuing growth in e-commerce is fueling a tight market for distribution and fulfillment centers space, either leased, purchased or through a partner, as companies look to expand their networks to meet growing consumer demand for rapid parcel delivery.

According to commercial real estate firm CBRE, there was 220 million square feet of net absorption of industrial/logistics real estate space in the U.S. in 2015, of which 50 percent to 75 percent comprised warehouses. This is compared to 150 million square feet of new supply, making the market the tightest it’s been in years.

And CBRE’s report on the U.S. industrial and logistics space market finds the availability of industrial warehouse space fell to 8.8 percent in Q2, down from 9 percent in Q1, marking the 25th straight quarter of decline.

“While the gap is narrowing, demand is still outpacing supply by a lot – it’s out of whack,” said David Egan, head of industrial research, Americas at CBRE. “The reason is primarily e-commerce. Demand has been really good, frankly a lot better than people expected, and the supply side can’t keep up.”

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According to commercial real estate firm CBRE, there was 220 million square feet of net absorption of industrial/logistics real estate space in the U.S. in 2015, of which 50 percent to 75 percent comprised warehouses. This is compared to 150 million square feet of new supply, making the market the tightest it’s been in years.

And CBRE’s report on the U.S. industrial and logistics space market finds the availability of industrial warehouse space fell to 8.8 percent in Q2, down from 9 percent in Q1, marking the 25th straight quarter of decline.

“While the gap is narrowing, demand is still outpacing supply by a lot – it’s out of whack,” said David Egan, head of industrial research, Americas at CBRE. “The reason is primarily e-commerce. Demand has been really good, frankly a lot better than people expected, and the supply side can’t keep up.”

Read Full Article