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Industrial Real Estate Roundup: Surging warehouse demand fuels job growth, new developments

Retailers across the country are occupying new warehouses or signing lease extensions for current facilities

(Photo: Jim Allen/FreightWaves)

Real Estate Roundup is a weekly rundown of developments in the world of industrial real estate used for logistics and transportation. This week: Publix, Amazon and Starbucks are among the companies adding warehouse space or re-upping at existing facilities.

From supermarkets to coffee shops and e-commerce titans, retailers are not slowing plans to add more and more warehouse space.

The high level of activity is readily apparent in employment figures. The number of workers employed in the warehousing and storage sector rose 2.3% to 1.27 million in October compared to the previous month, according to the Bureau of Labor Statistics. It’s the third straight month of gains after warehouse employment dipped this spring when COVID-19 hit and retailers limited hours of operation to counter panic buying.

The seemingly unquenchable thirst for additional warehouses is also seen in a steady stream of new development projects.

Publix Super Markets recently announced it will double the size of a planned refrigerated warehouse in the Greensboro, North Carolina, suburb of McLeansville by adding capacity for dry goods storage. Publix will now build a 2.2 million-square-foot facility, up from its original plans of 1 million square feet. The $400 million complex will include a return center, a fleet maintenance building, dispatch and a security post, in addition to the warehouse, according to Lexington, Kentucky-based Gray, the construction firm working with Publix on the development.

It’s the first North Carolina distribution center for Publix, which plans to serve its stores in North Carolina, South Carolina and Virginia from the new site. It will be the 10th distribution center nationwide for Publix.

Amazon plans to develop its third fulfillment center in Mississippi, the online retail giant said in early November. The Seattle company will build a 700,000-square-foot distribution warehouse in Canton, a suburb of Jackson. The facility is expected to open in August 2021 and will employ about 1,000 full-time workers. Amazon already has warehouses in Byhalia and Olive Branch, both located in the Mississippi suburbs of Memphis, Tennessee.

Amazon is blanketing the nation with fulfillment centers, with construction ongoing at sites near Dallas and San Antonio, Texas, and Syracuse, New York — to name just three.

While it’s not a new facility, Starbucks recently agreed to extend its lease on a warehouse near Nashville, Tennessee. Coffee slinger Starbucks will stay at the 680,200-square-foot facility in the suburb of Lebanon after signing a lease extension with its landlord, Duke Realty.

A Duke Realty executive told industry trade publication Commercial Property Executive that there’s not enough warehouse space to meet surging demand, not only in red-hot markets like Nashville but just about anywhere in the U.S.

“Nashville is a highly desirable market with proximity to three major thoroughfares that make it an ideal gateway to the Midwest, the West and the South for companies looking to expand their logistics capabilities,” said Jeff Palmquist, vice president of leasing. “However, demand for large industrial space is currently greater than supply.”

Local government leaders realize there’s an opportunity waiting in the warehouse and distribution space. Economic development officials in Alcoa, Tennessee, are working with Fort Worth, Texas, real estate company Hillwood Investment Properties to potentially redevelop a closed golf course into warehouses to lure a distribution client, according to WBIR. The facility could create 750 new jobs. Officials declined to comment on the report.

Andy Peters

Andy Peters is an Atlanta-based staff writer with American Banker, a news publication that covers the banking and financial services industry. He also maintains a freelance career and has written about industrial real estate and transportation issues.