NEW YORK CITY AND NEWARK, NJ—Increasing demands for rapid delivery and rising transportation costs are pressuring retailers and e-commerce companies to locate distribution facilities as close as possible to customers, factors that continue to drive industrial space planning decisions in the country's number one distribution market, metropolitan New York and New Jersey, according to a new report from Jones Lang LaSalle.

In a golf course-themed research study, The Leaderboard: The Top 18 Distribution Markets in the United States, JLL says the market's ability to service cities up and down the eastern seaboard, combined with its connections to the #3-ranked Central and Eastern Pennsylvania markets, offsets higher labor and real estate costs in the region.

“While real estate costs are higher nearer to the Northern New Jersey and New York population nexus, the region also provides diversity in site selection options as well as labor availability and costs that are not extreme, although a few related metrics like unionization rates tend to slightly offset an overall strong labor score in our model,” JLL says in the report, adding that Central and Eastern Pennsylvania markets “provide more 'large-block' development opportunities and a lower average land basis, as well as a beneficial business operating environment—at the likely sacrifice of increased transportation or service costs.”