Top National Distribution Center Real Estate Trends 2019

by Josh Bays, on May 22, 2019 9:23:31 AM

One of the biggest challenges companies face when expanding their distribution footprint is the lack of available real estate product in favorable locations that have the capacity to support their project. Site Selection Group, a full-service location advisory, real estate and economic incentive services firm, monitors industrial activity in the United States. Over the past quarter, warehouse inventory has diminished as corporate expansions outpace construction.

National industrial vacancy rates have been steadily declining

Vacancy rates have been steadily falling post-2010, while rental rates continue to rise, though in recent years this growth has slowed. The graph below displays this trend.

National Distribution Center Vacancy and Rental Rates

Dist Pic-1

National construction starts and deliveries have been slowly decreasing

From 2010-2016, national construction starts and deliveries steadily increased on an annual basis, but construction starts appear to have peaked at the end of 2016. If this trend continues, the constrained industrial real estate market will likely further tighten as deliveries taper off. The following chart shows the change in national construction starts and deliveries since 2010 by quarter.

National Growth Trends in Distribution Center Real Estate

Dist Pic2-1Construction activity is still active in the large population centers

Although industrial construction activity appears to be slowing on a national scale, there are still several very active markets. Construction activity seems to be correlated to high population centers to reduce delivery times to customers as the bulk of large industrial leases are e-commerce or retail fulfillment related. The following interactive map shows the 40 markets with highest construction activity in Q1 2019 and is shaded by average rental rates.

Top 20 industrial leases of Q1 2019

The following chart shows the largest industrial leases in the United States during the first quarter of 2019. Unsurprisingly, eight of the most active industrial real estate markets appear on this list.

Company Square Feet Address Metro Area
MillerCoors 1,300,281 863 E Meadow Rd Greensboro-High Point, NC
Lowe's 1,200,000 4532 United Dr Vineland-Bridgeton, NJ
The J.M. Smucker Co. 1,075,260 1200 Fulghum Rd Dallas-Fort Worth-Arlington, TX
Undisclosed 1,004,674 E Cleveland Rd Dallas-Fort Worth-Arlington, TX
PVH Corp 982,777 8500 Tatum Rd Atlanta-Sandy Springs-Alpharetta, GA
PepsiCo 912,552 5510 Exploration Dr Indianapolis-Carmel-Anderson, IN
Tesla Motors 870,240 17100 S Murphy Pkwy Stockton, CA
Barrett Distribution 829,464 6100 E Holmes Rd Memphis, TN-MS-AR
ULINE 810,899 3131 Hogum Bay Rd Olympia-Lacey-Tumwater, WA
Quaker Distribution 802,390 1901 Beggrow St Columbus, OH
Home Depot 770,640 Fallbrook Dr Houston-The Woodlands-Sugar Land, TX
CTDI 705,955 1753 Chaplin Dr Dallas-Fort Worth-Arlington, TX
Steelcase 611,576 12400 Arrow Rt Riverside-San Bernardino-Ontario, CA
William Sonoma 597,818 6101 Sierra Ave Riverside-San Bernardino-Ontario, CA
Fresenius Kabi 590,525 120th Ave & 122nd St Chicago-Naperville-Elgin, IL-IN-WI
Barrett Distribution 590,000 152 Route 206 New York-Newark-Jersey City, NY-NJ-PA
XPO Logistics 553,592 1350 N Waterman Ave Riverside-San Bernardino-Ontario, CA
Undisclosed 550,000 300 Park Center Dr Winchester, VA-WV
Undisclosed 514,491 3538 TradePort Ct Columbus, OH
Undisclosed 505,735 15097 Van Vliet Ave Riverside-San Bernardino-Ontario, CA

Source: Costar

Topics:Distribution CentersEconomic IncentivesSite Selection GroupSite SelectionLocation Advisory



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