The Real Deal Los Angeles

L.A. is one of the world’s fastest growing markets for logistics properties

Six of the top 10 logistics hubs, ranked by prime rent growth, are in the U.S.
May 17, 2016 10:30AM

Chart from CBRE report

Chart from CBRE report

A rise in online shopping is pushing up rents for fulfillment and distribution centers in the L.A. area.

The Los Angeles and Orange County area is the seventh fastest growing logistics market in the world., according to a new report by CBRE. Six of the most quickly growing markets are in the U.S.

“Global consumer demand is strong, and an ever-increasing share of retail sales are taking place online,” Richard Barkham, CBRE’s global chief economist, said in a statement. “That is prompting traditional retailers, e-commerce companies and third-party logistics firms to seek out advanced ‘prime’ logistics warehouses to modernize their supply chains and thus facilitate the rapid delivery of goods.”

While the most expensive logistics real estate markets are still spread throughout Asia and Europe, the Americas outperformed the global average year-over-year prime rent growth by nearly 3 percent, the report shows. Oakland, C.A. tops the list of the fastest growing markets with an annual rent gain just south of 30 percent, followed by New Jersey with 15 percent.

The sharp rise in the value of logistics properties, or distribution and e-commerce fulfillment centers, is largely due to the persistent growth of online shopping, the demand for which is particularly intense in the coastal markets.

Distribution and fulfillment centers with high ceilings and major loading dock capacity are especially popular these days, according to the report. Such features are able to better accommodate new technologies in stacking, storage and retrieval. — Cathaleen Chen