Los Angeles, CA

U.S. Hits Record Number of 1M SF Warehouse Leases in 2021 Los Angeles, CA

Rebounding economy drives demand for mega deals, retail and wholesale led industrial large-lease activity last year; the Inland Empire was third for large transactions

25 Jan 2022

aerial of an industrial warehouse loading dock

Last year was a record year for large warehouse leases, driven by a rebounding economy and strong e-commerce sales.  Companies committed to 57 warehouse leases of 1-million-sq.-ft. or larger across the U.S. in 2021, a 19% increase from 2020, according to CBRE.

CBRE charted the increase in mega warehouse leases as part of its analysis of the 100 largest U.S. industrial & logistics leases of 2021. CBRE found that, among those 100 leases, the average 2021 transaction size increased to 1,053,000 sq. ft., slightly above 2020’s average of 1,038,183 sq. ft.

“Over the past decade plus, the Inland Empire has proven to be one of the most dynamic markets in the country given its proximity to the Ports of LA and Long Beach while sitting in the region’s epicenter of the freeway system, providing direct access to key population centers in Southern California and the 11 Western states,” said Ian Britton, managing director at CBRE’s Ontario, Calif. office. “With the rapid adoption of e-commerce and an overall boost in consumption, demand has never been more robust with just a mere 0.5 percent vacancy rate across Greater Los Angeles and the Inland Empire.”

He added, “E-commerce, third-party logistics providers and general retail and wholesale lead the way in terms of leasing activity. Our region’s mega-warehouse facilities allow companies the opportunity to consolidate operations and increase efficiencies while reaching close to 70 million people across Southern California and tap into the 13th largest economy in the world. Overall demand in the region exceeds the amount of warehouse space under construction by a ratio of two-to-one.”

The industry sector claiming the largest share of those 100 leases is general retail and wholesale, which recorded 44 transactions (46.1 MSF). This was a significant jump from 2020 when that sector recorded 32 transactions (35 MSF). E-commerce-only occupiers, last year’s leader, were second at 21 deals (27 MSF), followed by food and beverage users at 15 deals (14.2 MSF).

By market, Chicago had the greatest number of the top 100 transactions with 12. The Pennsylvania I-78/81 corridor followed with 11 but recorded the most transacted square feet at 12.4 million. The Inland Empire had 10 large transactions. Greenville – Spartanburg, SC, a fast-growing market in the southeast, made the top 10 for the first time.

Leading Markets Number of Transactions Transacted MSF
Chicago 12 12
PA - I-78/81 Corridor 11 12.4
Inland Empire 10 10.2
Dallas – Fort Worth 9 8.6
Atlanta 8 8.4
Indianapolis 6 5.5
Phoenix 5 6
Columbus 5 5
Central NJ 5 4.6
Greenville - Spartanburg 3 2.7

“It’s notable to see Greenville-Spartanburg on this list for the first time,” said James Breeze, Global Head of Industrial & Logistics Research for CBRE. “As core markets continue to struggle with availability, growth markets will begin to see larger deals as occupiers look to address their space needs.”

Read the entire report here.

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.