HOUSTON – (Realty News Report) – E-commerce is driving a record-setting boom in America’s warehouse sector as projects totaling 330 million square feet — or roughly 7,575 acres under roof – are under construction, according to a new report from Lee & Associates.
The national warehouse surge is a response to consumers’ rotation to online shopping during the coronavirus pandemic, according to a year-end industrial study Lee & Associates, a national commercial real estate firm.
“Despite damage to the labor market, national and world economies, companies positioned for e-commerce have won a dramatically increased share of total sales. Consequently, skyrocketing online sales have intensified already-strong demand in key markets for big-box and last-mile distribution facilities,” the Lee & Associates report said.
Amazon alone accounts for 10 percent of the amazingly strong activity, Lee & Associates reported. But across the nation, Target, Walmart, Home Depot have occupied sizable facilities along with space leased by hundreds of general merchandisers and home improvement companies.
Across the nation, 203.7 million square feet of industrial space was absorbed in 2020, up 27 percent from the year before. Activity surged at year-end. A net of 99.2 million square feet filled in fourth quarter, a record-setting quarter.
E-commerce draws massive imports from overseas.
“Record-setting inbound cargo is straining U.S. ports, and officials nationwide are steaming ahead with expansion plans,” Lee & Associates said. “As the year ended, dozens of container ships were anchored off the Los Angeles-Long Beach port complex waiting weeks for berths and with more ships arriving daily.”.
The emerging distribution of COVID-19 vaccine has added more confidence to the Houston market, says Robert McGee, principal of Lee & Associates – Houston.
“The fourth quarter was the closest to normalcy since the pandemic began. Deals put on hold for the previous two quarters finally started to land,” McGee said. “News of the vaccine and improving economic signs lifted confidence as 26 million SF was delivered during the year.”
Major Houston industrial leases include: Dunavant Distribution leasing 784,000 SF on Red Bluff Road in Pasadena; H-E-B leasing 401,280 SF at 4501 Blaylock Road and Amazon leasing 368,467 SF in the Fallbrook Pines project.
Two Amazon-occupied properties in the Houston area have been sold recently. WSRE CP CLAY Owner LP, an entity affiliated with Walton Street Capital, acquired an 806,000-SF Amazon distribution building on Clay Road in Katy, near the Grand Parkway. In the other deal, Exan Capital, a Miami-based investment firm, acquired a 1 million-SF Amazon fulfillment center in Brookshire at 31555 Highway 90. The seller was Duke Realty, which developed both buildings.
Also, in Texas, one of the nation’s most notable Amazon projects is being planned for Pflugerville, near Austin. It is expected to be a multi-story, 3.8 million SF facility.
The Dallas-Fort Worth market leads the nation with 32,789,685 SF under construction, Lee & Associates reports.
Jan 26, 2021 Realty News Report Copyright 2021
File: Amazon E-commerce Drive Construction Boom
File: Lee & Associates. Amazon E-commerce Drive Construction Boom in industrial space.
Caption: Amazon distribution facility in Brookshire near Houston. Courtesy: JLL