Holiday Shopping Frenzy Forces Retailers to Battle for Warehouses in 2015

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DistributionFollowing the biggest Cyber Monday ever, retailers and e-commerce companies are engaged in a heated battle for the biggest distribution center facilities in locations close to large populations.  As retailers bow to the demand for instant delivery gratification, JLL market data shows rising rents and a growing number of tenants searching for warehouse and distribution space.  Sixty tenants are currently seeking big box warehouses of one million square feet or more nationwide, says JLL, with demand outweighing immediate, available sites by nearly three to one.

“Every retailer is asking how close can I put my distribution center to the customer?” said Craig Meyer, President of JLL’s Industrial Brokerage group. “Proximity is the key to profitability in this era of same- and next-day delivery. To out-deliver the competition, we are seeing rapid growth from retailers on the East Coast, in major cities across the country, and even in secondary logistics corridors.”

In 2015, approximately 171 million square feet of new distribution center space is expected to complete nationwide. These new deliveries represent the highest level in seven years, but still fall below the 40-year average of 178 million square feet.  At year-end, nearly half of 2014 construction activity was taking place in the nation’s six largest logistics markets (Los Angeles, Inland Empire, CA, Dallas/Fort Worth, Chicago, New Jersey, Philadelphia and Atlanta), leaving supply even more constrained in secondary markets.

Download a copy of JLL’s Global Omni-channel Revolution report here.

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