Demand for Warehouses Lifts Emerging Markets
Half of the US markets tracked by Colliers reported industrial occupancy gains of more than 5M SF in 2021.
With industrial warehouse space in major markets nearly filled to capacity, emerging markets are experiencing a bonanza of industrial sector growth, according to a report released by Colliers.
Half of the US markets tracked by Colliers reported occupancy gains of more than 5 million SF in 2021, while 60 markets posted occupancy gains of more than 1 million SF.
The top industrial markets in 2021, measured in net absorption—Chicago, Dallas-Fort Worth, Atlanta, Inland Empire and Houston, respectively—accounted for nearly 33 percent of all net absorption in the country.
The demand for warehouse space, fueled by 3PLs and e-commerce tenants, also is driving industrial sector growth in emerging markets: Memphis, Columbus OH, Las Vegas and Cincinnati each experienced more than 10 million SF of occupancy gains in 2021, Colliers said.
The markets with the most activity growth in 2021, measured in net absorption as a percentage of inventory, were Charleston, SC at 13.5 percent; Huntsville, AL (11.3 percent); Austin (11.2 percent); Savannah (9.3 percent; and Las Vegas (7.9 percent).
The intense demand for new warehouse space spurred a record increase in new construction in 2021, with 520 million SF of industrial space under development at the end of the year, an increase of more than 50 percent compared to the total at the end of 2020.
The Chicago industrial market delivered the most industrial space in 2021, totaling 31 million SF. Dallas-Fort Worth tops the list of markets with the most space under development, with 59.3 million SF in the pipeline at the end of the year.
Bulk occupier demand (companies occupying more than 100,000 SF) remained at record levels in 2021, Colliers said. At the end of 2021, occupier activity in bulk industrial space totaled nearly 583 million SF, a 16-percent jump from the previous record of 502 million SF set in 2020.
The average industrial space footprint of bulk occupiers also increased to 291,000 SF, five percent higher than the average footprint in 2020.
Colliers said third-party logistics providers and packaging companies accounted for more than 28 percent of all bulk activity last year, up from 22 percent in 2020. Seven of the top 10 bulk occupiers in 2021 were 3PLs, with nearly 40 million SF.
The second-largest share of the bulk occupancy pie went to e-commerce companies, who accounted for about 20 percent of activity in 2021.