The U.S. is facing a warehouse shortage, with 1 billion square feet of new industrial space needed by 2025 to keep up with demand, according to commercial real estate services company JLL. More e-commerce activity and faster delivery is driving up demand and shifting local economies, like in the Lehigh Valley region of Pennsylvania. Now, open land is scarce, forcing real estate developers to find unconventional spots, like a scuba diving center, if they want to keep building.
For every Cyber Monday purchase, there is a warehouse employee packing up those soon-to-be presents.
The big online shopping holiday comes amid a warehouse shortage across the United States as distribution center vacancy rates are at all-time lows. Nearly 96% of existing industrial space is in use, according to commercial real estate services company JLL.
The U.S. may need an additional 1 billion square feet of new industrial space by 2025 to keep up with demand, JLL estimates.
“The industry is effectively sold out through the next year,” Chris Caton, managing director of global strategy and analytics at Prologis, told CNBC.
Rents are at all-time highs and pre-leasing rates have skyrocketed, which is when warehouses are leased before construction is even complete.
“The leasing volume is almost triple in some cases to what’s being built every year,” Mehtab Randhawa, senior director of industrial research for the Americas at JLL, told CNBC.
For example, another nearly 190 million square feet of warehousing space was under construction in North America during 2020, and more than 43% of the buildings were pre-leased, according to CBRE.
This demand is driven by retailers beefing up e-commerce operations amid the online shopping boom, and investing in faster delivery thanks to consumer expectations. Retailers are also securing more storage space in the U.S. to mitigate the impact of future supply chain shocks, like those caused by the coronavirus pandemic.
Plus, e-commerce and logistics take up three times as much space as brick-and-mortar retail.
The expansion of warehousing has shifted local economies, like in the Lehigh Valley of Pennsylvania.
The rapid growth has created controversy over land use because the warehouse boom is tightening the supply of land.
“Our folks … are very upset about the warehouses, and they’re very upset about the truck traffic that it’s creating,” Northampton County Executive Lamont McClure told CNBC.
That’s pushing industrial developers to get creative and find more unconventional spots, like a Lehigh Valley aqua park and scuba diving center if they want to keep building.
Lehigh Valley native Stuart Schooley told CNBC that he and some friends tried to stop the construction of the first warehouse on their street.
“We realized we couldn’t stop it … [and it] just started a progression of one warehouse after the other. We were the last property,” Schooley, owner of Dutch Springs, a diving center and aqua park in the Lehigh Valley, told CNBC.
Now, Schooley is selling the land so he and his wife Jane can retire.
Real estate developer Trammell Crow is purchasing the property and looking to build two warehouses on the land.
“We used to be quite welcome, and the worm has definitely turned, especially in places like the Lehigh Valley, where I think people feel like when is enough, enough?” Andrew Mele, managing director in Trammell Crow’s Northeast metro division, told CNBC.
So, what do all these warehouses mean for American consumers and business people from Wall Street to Main Street?
» Subscribe to CNBC: https://cnb.cx/SubscribeCNBC
» Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision
» Subscribe to CNBC Classic: https://cnb.cx/SubscribeCNBCclassic
About CNBC: From ‘Wall Street’ to ‘Main Street’ to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more.
Connect with CNBC News Online
Get the latest news: https://www.cnbc.com/
Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC
Follow CNBC News on Facebook: https://cnb.cx/LikeCNBC
Follow CNBC News on Twitter: https://cnb.cx/FollowCNBC
Follow CNBC News on Instagram: https://cnb.cx/InstagramCNBC
#CNBC
Why Warehouses Are Taking Over The U.S.
source
WAREHOUSE JOBS ARE SLAVERY ❗ THERE NOT A LIVING WAGE, THEY TREAT PEOPLE LIKE CRAP! MEANWHILE THESE INVESTORS ARE MAKING ALL THE MONEY 💰💰💰💰💰💰💰💰💰💰💰💰💰💰 WHY WAREHOUSE WORKERS CAN'T AFFORD A HOUSE 🏡🏡🏡🏡🏡 SLAVE WAGES 🔥👹🔥😈👿🛑🛑🛑🛑🛑🛑🛑🛑🛑🛑🛑🛑🛑🛑🛑🛑
I live in Lehigh Valley. Many of these warehouses have been built years ago and are still sitting empty. Why? I think something more nefarious has been planned. The economy is about to crash and we are getting ready to handle a lot more inventory?? Doesn't make sense.
Our politicians are in their knees for any for capitalism. Disgustingly selfish and short sighted
They have destroyed our neighborhood with these warehouses. We are surrounded by four huge warehouses here in North east Philadelphia right off of the Delaware river
Amazon is its own landlord!!!😮
Can anyone update on which cities are currently experiencing this warehouse boom?
Why are we seeing all these massive empty warehouses all over the country I think it's because something is going to be happening soon and they're going to be used to Warehouse people because they're going to be taking away the property of everyone
Because people dont shop anymore and only order online
Some people think the warehouses are for storing the dead when the next pandemic hits. Some people think it might be for warehousing living people.
For American industrial production or storing goods from china?
Warehouses absorb a great many unskilled workers.
They’d have to buy the land? From the owners (farmers)?
well, people want their buttplugs delivered in one day but now they complain they need to deal with warehouses because of that.
Loosing the farmland is the real problem. When it's gone it will not come back.
Everything is becoming centralized and will be controlled basically by one organization. Plan and simple.
Nah, those warehouses are going to be re-education camps here soon. That's why so many are going up all if a sudden.
1:38 “rhandwa”💀
What a wasteful country
They say these are best used in a post apocalypse . Its crazy but it sort of makes sense
Thank you president Joe Biden. Now homeless American can get thier life back , god bless you SIR
Now I can say America will be great again
Thank you America for returning employments for American people
I hate it! I hate online shopping, I personally like holding the product. And these ugly warehouses are popping up everywhere. I hate it hate it hate it
I see huge warehouses being built but no one is using them.
"That translating to $45.000/year with high school diploma", after taxes and rent how they should survive?…. literally survive….
Comments are closed.