Retail

eCommerce Boosts The Warehouse Rental Industry

With the boom of any industry comes the rise of equal — and sometimes greater — cottage industries. For eCommerce, this has meant breathing life back into the once-lagging business of warehouse.

A recent article in The Wall Street Journal notes that rental rates for warehouse space in the U.S. jumped 9.9 percent from 2014 to 2015, according to real estate brokerage firm CBRE. This increase is, in large part, thanks to the continued growth of online sales, necessitating sorting, storage and gateway facilities close to major population centers. The prime location of these warehouses is a key factor in making speedy delivery possible to points throughout the continental United States.

According to WSJ, growth of warehouse rental rates within the U.S. outpaced that of nearly every other market around the globe, with an average of 2.8 percent growth. And, within the U.S., the market that saw the greatest inflation was that of Oakland, with a 29.8 percent leap in warehouse rental rates.

David Egan, CBRE’s head of industrial and logistics research for the Americas, spoke with WSJ, noting that the boom is being fueled by eCommerce.

“There are huge premiums being placed right now on being close to the consumer; speed of service, speed of delivery is a critical component of why people choose to buy from one retailer over another,” Egan said. “To get the goods to consumers fast, you have to get close to them.”

As more online retailers look to gain a competitive advantage, warehouse rental rates near major population centers are sure to continue to rise, both in the U.S. and abroad.

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