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It is well-known that e-commerce and logistics firms now drive much of the demand in the nation’s industrial market, but the importance of these sectors continues to grow, and that may mean even more good news for the Chicago region.
E-commerce and logistics tenants signed a larger share of the 100 largest industrial deals in 2018 than they did in 2017, according to a report from CBRE.
CBRE found that 61 of the largest 100 leases nationwide were signed by e-commerce companies and logistics firms for a total of 61.5M SF, a significant leap over the previous year, when the sectors were responsible for 52 of the largest leases and a total of 43.2M SF.
Last year’s biggest leases were spread across 32 markets, and Chicago had five, putting it at the top of the heap with other logistics hubs like California’s Inland Empire, Pennsylvania’s I-78/I-81 corridor, Dallas-Fort Worth and Atlanta.
Experts say the rise of e-commerce has fundamentally changed the industrial sector. In the recent past, the sector’s growth was highly correlated with increases in the nation’s gross domestic product, but today it expands as online shopping grows more popular.
CBRE Americas Industrial & Logistics Investor leader Chris Zubel estimates that for every $1B increase in online spending, the nation will need another 1.2M SF of distribution space.
Consumers spent $517B online in 2018, according to the U.S. Commerce Department. That is an annual increase of 15%, but still just 14% of total retail sales. That means demand for new space will continue perhaps even in the face of a recession, the Chicago-based Zubel said.
And Chicago will definitely get its share of mega-leases in the next few years.
“We are the world’s largest inland port, which means Chicago will be viable for a very long time and continue to perform well.”
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