Small- to Mid-Sized Tenants Dominate Demand For Last-Mile Logistics Space

An increase in last-mile logistics space has led to booming leasing demand in the small- to mid-size industrial user segment, according to new research from JLL.

The most popular size segment for industrial leases in the third quarter was the 10,000 to 49,000 square foot range, with 53.4% of leasing for the quarter coming from users looking for spaces smaller than 100,000 square feet. More than 137.9 million square feet of industrial product was leased in Q3, a new high for the year, according to JLL.

“The surge in e-commerce, labor shortages, and insightful consumer expectations, in terms of speed and delivery of product, have added more pressure than ever to the supply chain and its operations. As a result, industries servicing the supply chain and e- commerce, continue to experience an increase in demand,” the firm’s latest industrial report says, noting that in the third quarter the logistics, distribution and 3PL industries made up 28.3% of total leasing volume.

“As more and more companies continue to outsource their operations to meet consumer online demand we expect these industries to flourish, especially within the 3PL sector,” the report states. 

More than $51.2 billion of industrial sales closed this year through October, according to CommercialEdge. The average sale price of industrial assets is $110 per square foot, an increase of 25% over 2020. Demand for last-mile facilities has been particularly strong in Southern California, which is home to the top US industrial markets in the country: Los Angeles and the Inland Empire. Los Angeles netted $3.2 billion in activity for the first half of 2021, according to Real Capital Analytics, and the Inland Empire clocked in with $2.527 billion in sales in the first half of the year. 

This week, Newcastle Partners announced it had secured parcels in Anaheim, Norco, and Corona for more than $16 million to build last-mile facilities.