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3PLs top player in warehouse leasing last year

CBRE says for 1st time in 10 years of tracking, third-party logistics providers had most share of new activity

3PLs ruled the warehouse roost last year, CBRE says (Photo: Jim Allen/FreightWaves)

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.

Mark Solomon

Formerly the Executive Editor at DC Velocity, Mark Solomon joined FreightWaves as Managing Editor of Freight Markets. Solomon began his journalistic career in 1982 at Traffic World magazine, ran his own public relations firm (Media Based Solutions) from 1994 to 2008, and has been at DC Velocity since then. Over the course of his career, Solomon has covered nearly the whole gamut of the transportation and logistics industry, including trucking, railroads, maritime, 3PLs, and regulatory issues. Solomon witnessed and narrated the rise of Amazon and XPO Logistics and the shift of the U.S. Postal Service from a mail-focused service to parcel, as well as the exponential, e-commerce-driven growth of warehouse square footage and omnichannel fulfillment.