FROM THE FIELD:
INDUSTRIAL TENANTS
PAY THE PRICE AS ONLINE
SALES INCREASE
Retailers Need More Warehouse Space For Immediate Delivery
By Caulley Deringer
Executive Vice President
Mid-Atlantic
Large distribution tenants in gateway hubs are facing lower vacancy rates
and higher rental rates as more consumer purchases are made through
check-out carts as opposed to cash registers. Retail and online sales are
increasing thanks to an upswing in consumer confidence. Big box stores
and Internet retailers are expanding their warehouses to stock more
merchandise so they can accommodate the uptick in consumer spending
and Americans’ increasing adoption of online shopping. The increase in
merchandise stored for immediate delivery is causing a jump in net
absorption rates in gateway hubs such as Los Angeles, Houston, Seattle,
Miami, San Francisco and the Inland Empire. Also impacted are major
industrial markets like the Washington, D.C./Baltimore region and Chicago.
Net absorption of flex/industrial space in the Washington/Baltimore
region, for example, was 4. 3 million square feet in 2012, compared to
1. 4 million square feet during 2011, according to Delta Associates,
Transwestern’s research affiliate.
