Unprecedented consumer spending of $565.8 billion in October 2021 alone has put extreme stress on an already overwhelmed supply chain system, according to CBRE’s Q4 2021 Northeast Industrial Ports Brief. Port activity increased by 16.1% in 2021 and the lack of available warehouse space has created many challenges including soaring industrial rents.
“We have never before seen dynamics like these play out in the market — insatiable consumer demand, booming port activity and a dearth of available industrial space throughout the Northeast,” said Thomas Monahan, a vice chairman at CBRE. “While 58.5 million sq. ft. of industrial space is under construction in the region, most of which is already pre-leased, only 6.5 million sq. ft. is in port-adjacent submarkets.”
Warehouse leasing activity near the ports by e-commerce and third-party logistics companies has strained the supply/demand equation, putting stress on a market that is in dire need of additional space, according to the report. Occupiers have had to adjust to the new market realities and the supply chain disruptions in the Ports of Los Angeles and Long Beach in California. In many cases, they have moved to diversify their operations to the Northeast, creating additional competition for space in the region.
“The lack of warehouse space near our ports in the Northeast has prompted occupiers to look for space in markets such as Southern New Jersey and Eastern Pennsylvania,” continued Mr. Monahan. “This has resulted in new projects to meet this growing demand, but it’s clear that even the new construction will not be enough. Our research shows that demand will continue unabated throughout 2022, far outstripping supply.
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