- CBRE Group, an American commercial real estate services and investment firm, published a report titled “2022 North America Industrial Big Box Review & Outlook” earlier this month.
- The report states that general retailers and wholesalers leased more big-box facilities than ever.
- CBRE defines a big-box industrial facility as a warehouse/distribution center of 200,000 sq. ft or more.
- According to the CBRE’s report, the Inland Empire ranked 2nd for the highest Lease Transaction Volume in 2021, only trailing Chicago.
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In 2022, the North American big-box industrial market is predicted to have another solid year. According to CBRE, occupants will continue to focus on expanding their big-box space to serve a rising online customer base, keep more inventory, locate near additional ports of entry, and, in a new trend, expand near burgeoning domestic manufacturing activities.
According to CBRE’s 2022 U.S. Real Estate Outlook, due to increased momentum in the economic and real estate recoveries, substantial fiscal stimulus projects, and a resurgence of big cities and downtowns, 2022 will be a record year for commercial real estate investment.
As companies and real estate rebound from COVID-19 and associated limitations, CBRE predicts a 4.6 percent increase in US gross domestic product next year. Low loan rates and a renewed interest in overseas travel are predicted to boost investment volumes by 5% to 10% this year. And as foreign travel and society’s gradual return to the workplace boost offices, retail, restaurants, and residences, downtowns will rebound.
Overview of 2021
In 2021, the North American industrial & logistics industry set a new high for the second year in a row, as robust economic expansion resulted in large employment increases and higher retail sales. Over the last year, occupants have rented an unprecedented quantity of industrial space to serve a fast-rising online customer base and to boost safety stock to offset supply chain disruptions. In 2021, industrial real estate of all sizes and sorts did well, but none more so than the big-box industry.
A warehouse/distribution center with a floor area of 200,000 square feet or more is an industrial big-box facility. Last year, a wide range of tenants extended their presence in big-box buildings to service rising populations, be closer to enlarged logistical hubs, and take advantage of new government incentive programs.
Third-party logistics providers (3PLs) grew in logistics-hub cities to better serve their increasing client base, while general retailers and wholesalers leased more big-box buildings than ever before. This demand resulted in 450 million square feet of leasing activity, a 16 percent annual rent increase, 195 million square feet of new construction, and a 3.4 percent direct vacancy rate. Because of all of these factors, industrial cap rates have reached new lows.
“Our outlook for U.S. commercial real estate next year is positive due to several tailwinds overriding deterrents such as inflation. COVID-19 flare-ups still pose a risk, but governments and health authorities appear to have made progress in containment and treatment. We see this rising tide further buoying the capital markets, multifamily, and industrial & logistics sector and aiding the burgeoning recoveries of the retail and office sectors.”Richard Barkham | CBRE’s Global Chief Economist and Head of Americas Research
Check out the current report here. For the top 23 core, gateway, and developing markets in North America, this research reviews supply-and-demand fundamentals, demographics, logistical factors, labor, and location incentives.