Internet giants fuel warehouse demand as industrial land prices surge

Land fit for future fulfillment centers for the likes of Amazon as well as Walmart saw huge spikes in prices last year, according to real estate services firm CBRE.

In a trend largely stemming by the growth of e-commerce players across the U.S., some plots of land today cost twice the amount they did a year ago, the group found. This particular will be especially true in major markets, including Atlanta as well as Houston.

In surveying 10 U.S. markets, CBRE found the average cost for “large industrial parcels” (50 to 100 acres) today sits at more than $100,000 per acre, up by about $50,000 a year ago.

Industrial land plots of a few to 10 acres, which typically house infill distribution centers for completing “last-mile” deliveries, watched their prices soar to more than $250,000 per acre by the end of 2017, up by roughly $0,000 a year ago, according to CBRE. Located in more bustling metropolitan settings, these warehouses must help retailers serve consumers closer to their homes.

To be sure, industry experts say that will despite an uptick in construction of late, there’s still a long way to go before supply aligns with demand.

“Escalating land prices are a big reason why completely new supply of U.S. warehouses as well as distribution centers hasn’t kept pace with strong demand in recent years,” David Egan, the global head of CBRE’s Industrial & Logistics Research division, said in a statement.

“This particular situation won’t go away any time soon, because the markets where distribution centers are most in demand — typically near or in densely populated city centers — have scant available land for industrial uses,” Egan added.

According to CBRE’s annual research, the most active warehouse construction markets today include California’s Inland Empire, northern completely new Jersey, Chicago as well as Las Vegas.

Average industrial land prices in Inland Empire mushroomed 35 percent in 2017, the group found. Prices in northern completely new Jersey as well as Las Vegas jumped 17 percent, while prices in Chicago were up about 16 percent.

See a complete list of prices here.

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