The last mile of the delivery chain is proving to be the most valuable one for industrial properties.
A majority of U.S. industrial leasing during the third quarter involved parties hunting for less than 100,000 square feet, according to JLL data reported by the Wall Street Journal. The outlet noted that the size of the properties likely indicates a last-mile facility.
The value of such facilities is increasing as demand grows for quicker deliveries and supply wanes for warehouses, which are often closer to major cities. Interest in real estate during the e-commerce boom stretches beyond the final mile of the delivery journey, though.
JLL recorded industrial rents were up 7.1 percent in the third quarter year-over-year, while vacancy rates hit a record-low of 4.3 percent across the country, the Journal reported. Certain markets are seeing even less availability, including Los Angeles and New Jersey, which both sported vacancy rates below 2 percent.
The pandemic sparked a surge in the last-mile facility market as consumers turned from shopping in brick-and-mortar locations to demanding speedy delivery.
Overall, industrial real estate is the gift that keeps on giving. The third quarter shattered records across the industry, Transwestern said in a recent report.
The sector logged 159 million square feet of net absorption during the third quarter, the highest quarterly total in 13 years. Net absorption for the past year surpassed 500 million square feet for the first time in a 12-month period, according to Transwestern.
The boom in the industry is led by Amazon, which a recent analysis by The Real Deal showed had doubled its facilities footprint across North America since the onset of the pandemic.
Data from supply chain firm MWPVL International showed the tech behemoth expanded its portfolio of warehouse, distribution, data center and last-mile properties in the U.S. and Canada to more than 410 million square feet from around 192 million square feet it held in 2019.
[WSJ] — Holden Walter-Warner