Report: Warehouse construction surge lifts industrial land prices in U.S. logistics markets
CBRE found double-digit percentage increases in land prices in major industrial markets.
The e-commerce-fueled surge in development of warehouses and distribution centers has generated double-digit, year-over-year percentage increases in prices for industrial land in major U.S. markets, according to a new report from CBRE, Los Angeles.
CBRE found that the average price for large industrial parcels of 50-100 acres – usually earmarked for construction of large, regional warehouses – increased to more than $100,000 per acre from roughly $50,000 a year ago.
Similarly, industrial plots of 5-10 acres – often suited for construction of smaller, infill distribution centers in urban or suburban settings – increased to more than $250,000 per acre this year from roughly $200,000 a year ago.
“Escalating land prices are a big reason why new supply of U.S. warehouses and distribution centers hasn’t kept pace with strong demand in recent years,” says David Egan, global head of industrial and logistics research. “This 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.”
CBRE found double-digit percentage increases in land prices in major industrial markets, including California’s Inland Empire (up 35% this year to $980,000 per acre), Northern New Jersey (up 17% to nearly $1.8 million), Las Vegas (up 17% to $220,000), Chicago (up 16% to $250,000), Atlanta (up 14% to $100,000) and Houston (up 14% to $196,000).
In many cases, the markets that registered substantial gains in land prices also saw increases in average asking rents.