HOUSTON – (Realty News Report) – Demand for industrial & logistics warehousing space is driving an increase in megawarehouses, according to a new CBRE report. The largest 100 industrial lease transactions in 2022 included an unprecedented 63 signings for 1 million SF or more, up from 57 in 2021.
This was a key finding in CBRE’s analysis of the 100 largest industrial & logistics leases completed last year. Overall, the average size of the 100 top leases was 1.07 million SF, compared to 2021’s previous record of 1.05 million SF.
In Houston, six industrial deals totaled seven million SF combined, with five of the transactions measuring 1 million SF or more apiece. Tesla and Walmart both signed 1 million SF leases in the Houston area recently.
“The Houston industrial market had an outstanding year in 2022 with record-breaking year-end absorption and historic low vacancy,” said Cape Bell, First Vice President at CBRE’s Houston office. “We are optimistic about Houston’s industrial activity this year and expect to see positive absorption.”
Accounting for 53 of the top 100 leases, traditional retailers/wholesalers expanded their footprints to accommodate e-commerce sales growth and to hold more inventory to guard against supply chain disruptions. Third-party logistics (3PL) operators took second place, signing 18 of the top leases, up from 10 in 2021. E-commerce companies followed closely behind with 14 of the top 100, down from 21 in 2021.
“Despite an expected recession, the leasing of megafacilities is expected to remain solid this year as many occupiers continue to build out their e-commerce operations and sustain their inventory levels,” said John Morris, president of Americas Industrial & Logistics for CBRE. “Strong demand for megawarehousing centers is expected to continue in 2023 and a large number of construction completions will provide more opportunities for expansion.”
Warehouse construction has been strong in Houston. Houston’s South Belt/Beltway 8 industrial market has exploded with new construction in recent years with numerous warehouses being built from the Southwest Freeway on the west to Telephone Road on the east. IDV has signed a full-building, 603,389-SF lease with Penske at South Belt Central Business Park, located along Beltway 8 near Highway 288.
Top markets for these leases included traditional mainstays like the Inland Empire of southern California, which ranked No. 1, followed by , Chicago, Atlanta.
Houston with six megadeals totaling 7 million SF ranked fifth. Others in the top 10 included , Dallas-Fort Worth, Phoenix, Savannah, and Columbus, Ohio.
Feb. 21, 2023 Realty News Report Copyright 2023.
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File: Megawarehouses Leasing Like Hotcakes
Photo: Courtesy CBRE