Warehouse Space Is a Hot Commodity Again
Warehouse demand is back after several years of decline (The Wall Street Journal, subscription).
What’s going on: “Companies signed 146 leases across the U.S. for warehouses over 500,000 square feet last year, up more than 31% from the previous year to the highest level since 2022, according to real-estate firm Cushman & Wakefield.”
- The slowdown following the COVID-era boom had been most visible among large, sprawling warehouse spaces. The vacancy rate for those rose to almost 11% at the end of 2024.
Who’s renting: The renewed interest in warehouse space is “fueled by companies setting up U.S. manufacturing, suppliers to the data-center construction boom and retailers outsourcing their fulfillment operations to third-party logistics providers.”
- Third-party logistics providers are renting large spaces now thanks to retailers and other companies looking to outsource fulfillment.
- Firms that supply electrical systems, power racks and additional hardware in support of the artificial intelligence–fueled data-center construction boom are also leasing in earnest.
An additional factor: “Another dynamic driving new leasing is that some companies are nearing the end of lease agreements struck during the pandemic.”