It was another big year for the big box.
Companies signed a record 57 U.S. warehouse leases of 1 million or more square feet in 2021, up 19% from 2020 levels, according to data published Thursday by real estate services firm CBRE Group Inc. (NYSE: CBRE). Of the 100 largest manufacturing and logistics leases — which include the 57 megaleases — the average transaction size grew slightly to 1.05 million square feet from just under 1.04 million square feet. CBRE tracks manufacturing and logistics activity in its industrial property work, though the majority of transactions are in the logistics space.
Chicago, which had the strongest year of industrial activity in its history, led all markets with 12 transactions totaling 12 million. That was followed by the Interstate 78 and Interstate 81 corridor in Pennsylvania with 11, California’s Inland Empire complex with 10, and Dallas/Fort Worth with nine.
The Greenville-Spartanburg, South Carolina, market made it into the top 10 for the first time with three of the top 100 transactions, according to CBRE data. Classified by the firm as an “emerging growth” market, Greenville-Spartanburg has become an attractive location for industrial activity because of its relative affordability, temperate climate, pro-business policies and a growing population as Americans with newfound work-from-home flexibility flee larger and more expensive metro areas.
Megadeals in markets like Greenville-Spartanburg will become more commonplace as core industrial markets like New York-New Jersey, Los Angeles, Atlanta and the Baltimore-Washington corridor become more space-constrained and costly to occupy. John Morris, who leads CBRE’s Americas Industrial and Logistics business, said that the market has “just enough product” to meet current demand, but that megaprojects are “becoming fewer and far between” due to surging demand, labor shortages and, in certain markets, not enough land.
The “general retail and wholesale” sector, comprising occupiers with online and brick-and-mortar presences, accounted for 44 of the 100 largest leases last year, up from 32 transactions during 2020. E-commerce-only occupiers that ship only to residences came in second with 21 deals, followed by food and beverage users with 15 deals.
E-commerce occupiers closed 35 megadeals in 2020, up from 19 the year before. E-commerce demand surged mightily in 2020 as more consumers ordered online because stores were hit during the early months of the COVID-19 pandemic, consumers were afraid to return to stores once they reopened, and many Americans found online ordering to be convenient.