 |
| Craig Meyer |
CHICAGO, IL, Nov. 30, 2021 –
The industrial real estate sector continues to break records going into the
tail end of 2021.
The increase in online shopping has become
a primary driver of demand for smaller logistics facilities, making the most
popular size segment for leasing 10,000 to 49,000 square feet in the third
quarter, according to JLL’s Q3 Industrial Report.
Nationally, more than 137.9 million square
feet of total industrial product was leased in Q3, a new high for 2021.
“With demand for industrial space showing
no signs of slowing down, new inventory will be needed to bring supply and
demand closer to equilibrium and negate a future shortage of industrial space,”
said Craig Meyer, President, Industrial, JLL.
“As ecommerce grows, now more than ever
Logistics and Distribution and 3PL will be at the forefront, especially with
the upcoming holiday season and impending impacts from the cargo ships backup
logs observed at the close of the quarter.”
More than half of leasing in the U.S this
quarter came from users looking for space below the 100,000 square foot
threshold.
The surge in ecommerce, labor shortages,
and 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.
In Q3 the Logistics and Distribution and
third-party logistics (3PL) industries accounted for 28.3 percent of total
leasing volume.
As more and more companies continue to
outsource their operations to meet consumer online demand JLL expects these
industries to flourish, especially within the 3PL sector.
 |
| Leslie Lanne |
“In a world of two-hour shipping, consumers have
come to expect a specific window for their goods to arrive. said Leslie
Lanne, Executive Managing Director, Urban Logistics, JLL.
"The growth in online shopping and
the need for fast delivery times is driving demand for urban industrial space
unlike ever before.
“Ecommerce will keep driving the need for
vertical space, and as a result we’re going to see this new urban logistics
asset class spark progressively more developer and investor interest.”
Investors searching for yield identify this
space as a growing opportunity segment and are deploying capital toward
acquiring scale.
For example, a joint venture formed
between Arden Group and Arcapita Group recently announced plans to invest up to $2
billion in acquiring small- and medium-bay multi-tenant warehousing space across
major U.S. markets.
“With the tremendous leasing velocity that we
are seeing in every market around the country, buy-side underwriting and
investor demand for this segment of the market is stronger than what we
currently see within the big-box segment,” added Trent Agnew, Capital
Markets Platform Co-Leader for JLL.
 |
Trent Agnew
|
“The primary driver for this product type
is rent growth, as we are seeing renewal rents on smaller spaces routinely push
up 30 to 50 percent at expiration, driving significant NOI growth.”
With construction costs continuing to increase,
investor demand for small bay warehouses is expected to continue increasing,
which is anticipated to drive further cap rate compression in 2022. Select core
markets are seeing class B product trade at a sub-4 cap.
Contact:
Kimberly
Steele
JLL
Manager
Public
Relations
Phone: +1
713 852 3420
Email: Kimberly.Steele@am.jll.com
