As office occupiers shutter space, e-commerce induced expansion of the distribution and logistics industry drives industrial leasing and investment activity. Many industrial occupiers are focusing on “last-mile” delivery systems and retrofitting existing assets to include fulfillment centers for online orders. One company that is finding ways to fill pockets of empty space within occupied warehouses is Flexe. Flexe connects organizations that need warehousing space to organizations with extra space by subletting empty warehouse space to small retailers. Its network of more than 400 warehouses in over 45 markets allows online retailers to position products where they can be delivered overnight by truck.

U.S. seaports also play a big role in the industrial industry. As one of the top industrial real estate demand drivers, U.S. seaports continue to drive industrial demand in a big way by generating economic growth, to the tune of $5 trillion, and jobs. With the increasing popularity of online shopping, ships and ports are undergoing improvements to accommodate the increase in import and export volumes. Seven major seaports highlighted in Colliers International’s Industrial U.S. Seaport Outlook report shows that the flourishing U.S. economy should assist in keeping import volumes high, at least in the short term, until it is seen how possible shifts in U.S. trade policy will play out over the longer term.

In terms of the West Coast ports, they are better suited for the increased volume and subsequent ship sizes due to deeper harbors – the ports of Long Beach, Los Angeles and the Northwest Seaport Alliance (Seattle and Tacoma) boast harbor depths of 76, 53, and 50 feet respectively, while East Coast ports hover around 45 – 50 feet in depth.  Regardless of harbor depth, all ports were found to be the main economic driver in surrounding markets, and in some cases the state, which not only contributes to job growth but also to strong industrial occupier interest, development activity, leasing, and rent growth.

With industrial supply growing – nearly 200 million square feet was under construction in early 2017 – user demand is set to be met for the first time in over ten years. However, the effects of the proposed border adjustment tax and new shipping alliances are still yet to be seen on global trade and U.S. port activity.

Sources:

NAIOP, Warehouse Startup Sublets Unused Storage Space

NAIOP, Canadian and U.S. National Industrial Trends

Colliers International, Industrial U.S. Seaport Outlook

Bisnow, 7 U.S. Seaports Driving Economic Growth and Industrial Demand