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America’s Red-Hot Warehouse Market Shows Signs of Cooling

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The pandemic-induced surge in warehouse demand is showing signs of slowing as companies become cautious about leasing in an uncertain economy and seek to cut back on the massive inventory that has overwhelmed storage space this year.

Very thin vacancy rates are starting to rise, and one measure of US rental activity fell to its lowest level since the start of the pandemic in the third quarter.Warehouse Space remains tightSome companies are still storing goods in trailers outside of distribution centers, but broader numbers suggest pressures on one of the supply chain chokepoints are easing.

Demand remains strong for industrial property developers and researchers compared to pre-pandemic, but rising borrowing costs and reduced freight traffic are prompting developers to approach new projects more cautiously I am warning you that you are taking

“There are fewer trades transacted,” said Andrew Mele, managing director of the Northeast regional office.

Trammel Crow Ltd.

is a Dallas-based development subsidiary of CBRE Group Inc., a real estate services company.

The average warehouse vacancy rate across the United States rose to 3.2% in the third quarter from 3% last quarter, according to a commercial real estate services firm.

cushman and wakefield.

This is the first increase in two years and is still well below the 2020 national average vacancy rate of 5%.

Companies across the sector signed new leases for 163.1 million square feet of warehouse space in the third quarter, compared with 207.4 million square feet in the previous quarter, the company said. , still more than leased square footage in any quarter of 2019.

“There may be bubbles at first, but the industrial leasing market is very stable and strong. It goes from great to good,” Mele said.

After nearly two years of feverish construction and leasing, businesses’ inability to find enough empty warehouse space may be part of the decline, real estate experts say. I’m here.

Mark Russo, senior director and head of industry research at Real, said: -Savills Inc., a real estate service provider

Demand for storage space surge in 2020 As households were locked down during the pandemic caused a wave of online shopping and the retailer Place more items for faster delivery At home.

Amazon.co.jp Ltd.

He says his business has soared, doubling the size of his fulfillment network in 24 months.

Amazon’s last-mile delivery facility under construction last year in Syosset, New York on Long Island.


Photo:

Bruce Bennett/Getty Images

Now, Amazon Halt growth in warehousing operations and even sublease part of that space As demand for e-commerce recedes.

retailers including

Target Ltd.

,

walmart Ltd.

When

Nike Ltd.

After the overstocking of items such as casual clothing and household goods due to changes in consumer spending habits, the company is dealing with the excess inventory. Order cancellation and withdrawal and work to sell Extra items before the holidays.

Derek Fish, vice president of U.S. acquisitions at the Annapolis, Md.-based real estate firm, said companies are curbing high supply chain costs and becoming more wary of large investments in a volatile economy. , are also cautious about signing lease agreements. Real Term Transportation LLC.

“It’s getting a little harder to shake hands, negotiate leases and sign contracts. It’s taking more time,” Fish said. “Some of the larger groups are putting it on hold or saying, ‘We plan to make new leasing and capital spending decisions in 2023 when we have more clarity on our overall business outlook.’ There are places.”

The warehouse takes over Loop 303, near Phoenix, which leased 16 million square feet of industrial property in the first half of this year as companies look to change how goods move to avoid supply chain bottlenecks. Photo Illustration: Adele Morgan

Logistics report details

write destination Liz Young [email protected]

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Appeared as “Red-Hot Warehouse Market Shows Indications of Cooling” in print on October 15, 2022.

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