Warehouse rental rates in “secondary” markets like Denver, Detroit, and Portland now exceed prerecession levels, CBRE says.
The growth of e-commerce is driving demand for warehouse real estate in smaller, “secondary” markets across the U.S. as retailers expand their fulfillment infrastructure, according to a report released today by real estate and logistics services giant CBRE Group Inc.
Companies across the U.S. are seeking to expand their supply chain coverage by investing in DCs in regions beyond space-constrained top-tier markets, Los Angeles-based CBRE said in “Pent-Up Demand: Secondary Logistics Markets Poised for Accelerated Growth.” The trend is sparking stronger demand in markets like Denver, Detroit, and Portland, where space is more abundant and less expensive, CBRE found.
The finding marks a change because most U.S. warehouse development since 2011 has occurred in “primary” industrial markets, such as Atlanta, Chicago, and Los Angeles, CBRE said. Over that period, 13 primary markets tracked by the company have seen a 30 percent increase in average rental rates, while the 17 U.S. secondary markets increased by only 13 percent.
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