Third-party logistics providers leased more North American big-box warehouse square footage in 2022 than any other customer category, according to a report published Thursday by CBRE Group Inc. This is the first time that 3PLs have been the top player in the warehouse leasing market since CBRE (NYSE: CBRE) began compiling data in 2012.
CBRE (NYSE: CBRE) said 3PLs accounted for 41% of all big warehouse space — defined as 200,000 square feet or larger. Retailers and wholesalers, which led in 2021, came in second at 35.8% of the leasing share. Food and beverage companies came in at 8.7% of leasing activity.
The 2022 national vacancy rate stood at 3.3%, with four markets — Los Angeles, the Inland Empire about 80 miles east of Los Angeles, Toronto and Savannah, Georgia — all reporting vacancy rates under 1%. Demand for space remains high as businesses holding massive buffer stock of higher-value goods ordered during a stronger economic environment have nowhere to go with unsold inventory that they won’t liquidate.
First-year rent growth climbed 23% last year, an eye-popping surge that may make people wonder if end users will be the ones stuck with higher costs as they feed their way through the system.
Currently, 455 million square feet is under construction, an all-time record. Of that, about one-quarter has been pre-leased.
The growth of 3PLs is as much due to their own value proposition as in the macro trends in the industrial market. During the pandemic, many shippers turned to 3PLs to stabilize their businesses amid spiking demand. However, shippers didn’t return to a self-reliant mode once the pandemic ebbed and stayed with their 3PL partners, according to the report.
The Inland Empire posted the largest lease transaction volume last year at 46.7 million square feet. That’s well ahead of the 34.4 million square feet in Dallas/Fort Worth and 33.5 million in Chicago.