Top Distribution Center Site Selection Trends of 2021

by Josh Bays, on Jan 18, 2022 9:57:17 AM

While COVID-19 continues to insert uncertainty into the market, those associated with domestic industrial site selection projects will attest that the distribution sector remained incredibly active all throughout 2021. And, based on our anecdotal pulse on the market, the upward trend in activity is continuing well into 2022.

Site Selection Group, a full-service location advisory, economic incentive, and real estate services firm, monitors critical industrial site selection data metrics to help our clients make informed location decisions. The majority of our distribution center clients are aware of 2021’s hyperactive market, but a few are surprised to learn the impact the increased activity had on two key location drivers: distribution workforce and industrial real estate.

National Workforce Indicators | Distribution Sector


Source: EMSI, BLS

One of the more frustrating aspects of data analytics in site selection is that most “traditional” data sources lag upward of one year. Therefore, it is difficult to assess the impact that significant economic events — such as the pandemic — are having on the marketplace in real-time. However, there are a few reliable near-real-time data variables, and this blog will help us understand key distribution site selection trends from 2020.

Unemployment data and job posting intensity suggest tightening workforce

The chart below shows the national distribution sector unemployment rate by quarter compared to the overall national unemployment rate. Despite the activity in projects, the national distribution center unemployment rate remained elevated above the overall national unemployment rate, but both have been steadily decreasing over the past year.

Also included in the chart below is distribution job posting intensity by quarter. This is the measure of the number of unique distribution center job postings in a given time period (quarter) relative to the number of total distribution center jobs. As one would expect, the job postings data was highly correlated to distribution center unemployment. As unemployment rose, companies posted fewer jobs; as unemployment fell, companies posted more jobs.

The table below shows which metro areas had the most and least drastic changes in distribution job posting intensity. This list is filtered to large metros (greater than 100 unique postings within each time frame to prevent small market outliers). The column on the right shows the change in posting intensity from 2020 to 2021. The markets with the highest posting intensity are all metros that have seen either experienced enormous growth in recent years (Phoenix, Nashville) or are historic logistics hubs (Memphis).

Phoenix-Mesa-Chandler, AZ 43.15%
Nashville-Davidson-Murfreesboro-Franklin, TN 31.64%
Miami-Fort Lauderdale-Pompano Beach, FL 24.24%
Memphis, TN-MS-AR 21.95%
Richmond, VA 20.79%
San Jose-Sunnyvale-Santa Clara, CA -64.30%
San Francisco-Oakland-Berkeley, CA -58.10%
New York-Newark-Jersey City, NY-NJ-PA -53.40%
Boston-Cambridge-Newton, MA-NH -49.30%
Chicago-Naperville-Elgin, IL-IN-WI -41.80%

Source: EMSI, BLS

Industrial real estate statistics further highlight distribution center activity

The chart below shows national industrial vacancy rates over the last eight quarters plus the current projection for this quarter (Q1 2022). While it appears vacancy rates were steady or slowly climbing in 2020, by mid-2021, there has been a strong downward trend.

National Industrial Vacancy Rate

Manu-Dist-Charts--02-02Source: CoStar

The table below shows the five markets with the highest and lowest industrial vacancy rates. The markets with lower vacancy rates tend to be in CA where the market has been active for quite a while.


Sandusky, OH 11.60%
Macon, GA 9.30%
Chambersburg-Waynesboro, PA 8.60%
Jefferson, GA 8.50%
Boulder, CO 7.40%



Inland Empire, CA 1.70%
Los Angeles, CA 1.80%
Orange County, CA 2.20%
Lancaster, PA 2.30%
Canton, OH 2.60%

Source: CoStar (filtered to markets with 1,000,000 or greater vacant SF)

The increase in distribution activity is further evidenced by an increase in national industrial market rents. Year-over-year rent escalation is at 8.4% for the industrial market with the current national average for this quarter at $9.77/SF.

The table below shows the five markets with the highest and lowest 12-month market rent growth along with the associated average market rate per SF.


Market Rent 12 Month Market Rent Growth
Miami, FL $15.13 15.00%
Northern New Jersey, NJ $12.24 14.20%
Philadelphia, PA $8.84 13.10%
Nashville, TN $9.29 12.80%
Atlanta, GA $7.24 12.20%



East Bay, CA $15.13 3.60%
Ann Arbor, MI $9.21 4.60%
Saint Louis, MO $6.04 4.70%
Houston, TX $7.96 4.90%
San Jose, CA $24.91 4.90%

Source: CoStar

One of the most interesting industrial real estate trends to follow is construction activity. The table below shows the five markets with the most industrial square footage under construction as of the end of Q4 2021. Dallas-Fort Worth continues to significantly outpace the country as it relates to speculative construction.

Market Industrial Sq.Ft. Under Construction
Dallas-Fort Worth, TX 62,272,000
Phoenix, AZ 36,484,000
Atlanta,GA 30,513,000
Chicago, IL 29,747,000
Indianapolis, IN 24,612,000

Source: CoStar

Again, Site Selection Group focused on data variables that are near-real time for this blog. Any site selection decision should be supported with a wealth of information more than what is demonstrated here. Regardless, 2022 is shaping up to be every bit as dynamic as 2021.

Topics:Distribution CentersEconomic IncentivesSite Selection GroupSite SelectionLocation Advisory



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