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 U.S. 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.
“Escalating land prices are a big reason why new supply of U.S. warehouses and distribution centers hasn’t kept pace with strong demand in recent years,” said David Egan, CBRE Global Head of Industrial & Logistics Research. “This situation won’t go away any time soon, because the markets where distribution centers are most in demand – typically near or in densely populated city centers – have scant available land for industrial uses.”
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) and Houston (up 14 percent to $196,000).
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.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
