The e-commerce-fueled surge in development of warehouses and distribution centers has generated double-digit, year-over-year percentage increases in prices for industrial land in major markets, according to a new report from CBRE.
CBRE found that the average price for large industrial parcels of 50 to 100 acres – usually earmarked for construction of large, regional warehouses – increased to more than $100,000 per acre from roughly $50,000 a year ago.
Similarly, industrial plots of five to 10 acres – often suited for construction of smaller, infill distribution centers in urban or suburban settings – increased to more than $250,000 per acre this year from roughly $200,000 a year ago.
“As a result of the shift in consumer purchasing, there’s been a change in the tenant requirements of industrial occupiers who service those consumers,” said Thomas Monahan, executive vice president, CBRE. “Demand for buildings greater than 600,000 square feet on the NJ Turnpike Corridor remains frothy. Scarcity of both existing inventory and larger sites to accommodate these buildings has placed upward pressure on pricing, pushing land prices and rents to unprecedented levels.”
CBRE found double-digit percentage increases in land prices in major industrial markets, including California’s Inland Empire (up 35 percent this year to $980,000 per acre), Northern New Jersey (up 17 percent to nearly $1.8 million), Las Vegas (up 17 percent to $220,000), Chicago (up 16 percent to $250,000), Atlanta (up 14 percent to $100,000), Houston (up 14 percent to $196,000) and Central New Jersey (up 10 percent to $650,000).
In many cases, the markets that registered substantial gains in land prices also saw increases in average asking rents.
To read the report, click here.