Demand is soaring for big-box industrial distribution centers, those centers covering more than 300,000 square feet. And that’s good news for the commercial real estate business.
Jones Lang LaSalle recently released its first Big Box Velocity Index. And according to the numbers, 96.7 million square feet of industrial construction is now underway across the United States. Surprisingly, nearly half of this construction is of the speculative kind.
And when Jones Lang LaSalle says “big box,” the company means it. According to the index, the aveage size of the industrial distribution centers now under construction is 360,000 square feet.
Who’s filling all this space. Much of it is going to large e-commerce retail players.
“With e-commerce sales expected to more than double over the next four years, we anticipate increasing demand for highly specialized facilities,” said Craig Meyer, principal of industrial for Jones Lang LaSalle, in a writtten statement. “We are seeing a number of major retailers in the market looking for mega-fulfilment centers more than 2 million square feet near large population centers.”
In the Midwest, of course, one of those large population centers is Chicago.
Overall, more than a third of the growth in big-box industrial centers is being caused by demand from retailers. Meyer said that this shouldn’t surprise anyone.
“The demand from e-commerce is shaping the market more than ever before,” Meyer said. “It is influencing the requirements to both users and the industrial investors who make speculative construction possible.”