3 Markets Where Retailers Need Warehouse Space
Columbus, Ohio, Tampa, Florida, and Savannah, Georgia, are all experiencing rising demand for retail warehouse space from a number of mass retailers.
Executive Summary
Warehouse space has been hard to come by for some retailers in certain markets, and it’s caused some innovative thinking when it comes to empty spaces. For example, empty shopping malls, office buildings and even golf courses have been snapped up by retailers competing with each other for warehouse space.
Year over year, demand for warehouse space is up 22%, Chain Store Age reported, citing a new study from JLL. For 2021, 1,800 individual tenant requirements need over 660 million square feet of space. That’s above figures from 2020 and 2019.
“The pandemic accelerated demand for home deliveries,” JLL stated. “This year, logistics and parcel delivery [includes FedEx, UPS, USPS and DHL] has taken the number one spot—now making up nearly a fifth of all demand—as other industries (like traditional retailers and food and beverage) step into the home delivery game.”
Among mass merchandisers, warehouse space demand will be the highest ever, CSA reported.
“There is a lot of pent-up demand in value retailers—companies like Walmart, Target, Big Lots, TJX and Costco are vying for warehouse space,” JLL stated in its report, “2021 Industrial Tenant Demand Study.”
The three markets--Columbus, Tampa and Savannah--named in the study with big increases in industrial demand are key areas for retailers. Columbus, where demand has “exploded,” is within one day’s drive from 50% of the U.S. population--making it an attractive market for fulfilling online orders and shipping inventory.
“More and more 'out of market' developers are scouring the region for sites to develop,” the report said. “Part of the increase in demand is COVID-19-related, but there’s more going on. It’s more about the cost and logistical advantages of Columbus—you can reach almost half of the U.S. population within a day’s truck drive of Columbus.”
Tampa, which is seeing a housing shortage amid a tightening market, is experiencing a construction boost. The migration of people to the area is playing a role in the warehouse space demand, the report found. Tampa is one of the top growth markets in terms of population over the last five years.
Similarly, Savannah’s population has been rising, creating more tenant demand, “which is tied to port activity,” CSA reported. From 2020 to 2021, demand grew by nearly 10 million square feet.
“As the Southern California ports experience unprecedented congestion, port markets like Savannah (alongside Houston in the South and Oakland and the Northwest Seaport Alliance up the West Coast) are seeing a surge in Industrial demand, as tenants set up warehouse and distribution space to receive more product from more varied seaport locations,” JLL wrote.
See the full story at Chain Store Age.