- Some plots of industrial land in the U.S. now cost twice the amount they did a year ago, according to CBRE.
- This is especially true in major markets, including Atlanta and Houston.
- Industry experts say the supply of warehouse space across the country still hasn’t caught up with rampant demand
In her January 2nd CNBC article Internet giants fuel warehouse demand as land prices surge, Lauren Thomas describes how industrial land valuations are rising quickly due to the pressured of demand from ecommerce uses. “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,” David Egan, the global head of CBRE’s Industrial & Logistics Research division, said in a statement. “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,” Egan added.
Though there are some wide variations, GLDPartners experiences this every day in our project work – that there is a shortage of well-sited and ready to build industrial land. Much of this challenge is due to the incredible rise in demand for developing new ecommerce distribution centers. This is true in the US but also increasingly so in other developed ecommerce markets in Canada, and parts of Europe and Asia. Where there is land supply with good multimodal transport infrastructure access, land values are rising.
We are in the midst of a fundamental change in the underlying structure for how goods are shipped from the factory, stored in-market and then finally shipped to/near to the final customer. Some places, asset owners and investors are working to monetize this trend by creating valuable landing pad locations for inbound logistics investment – but critically also for outbound product movements. These outbound movements are driven by agribusiness products, mined minerals or manufactured products. Paying attention to outbound-oriented investment is vital to 1) create a logistics system balance of in and outbound, 2) increase returns from land investment (manufacturing pays more that most distribution uses, for example), and 3) critical mass in investment drives economic development in those localities.
The key for land investors, development interests and local governments is to understand exactly where their competitive “sweet spot” is – and undertake land-use and infrastructure investment strategies to support a wider investment plan that is based-off the markets direction. Be where the market is going – and anticipate with proper investments.
CNBC article Internet giants fuel warehouse demand as land prices surge
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GLDPartners | Global Logistics Development Partners is an international investment and advisory firm that works globally through its offices in the US, Canada, Mexico and the UK. The firm provides direct strategic supply chain and facility location advice to companies that manage global supply chains and the firm develops project and implementation strategies for revenue and infrastructure development at and around seaports, airports and strategic trade and logistics hubs. GLDPartners Website
Not in San Joaquin County, CA. City Planning, Landowners, Investors, Developers, Brokers have worked with the San Joaquin Partnership to scale spec development to meet this current and future demand. Over 26 million sq. ft. of new construction in 4 years creating over 7500 new jobs primarily in the e-commerce fulfillment market. Another 10 million is under plan or nearing breaking ground and construction over the next 18 to 24 months.
Thanks Mike. Agreed that SJ County is dong well. It’s location is ideal being so close to both Sacramento and the Bay Area. IN fact, we’re very high on the potential of the Stockton Metropolitan Airport due to its proximity to several Amazon DC/fulfillment facilities and the expanding Amazon Prime Air service there.
In our opinion, the entire Central Valley of California has tremendous and largely untapped potential. Only an hour or two from about the hottest technology and property markets anywhere, the CV is low-cost, lots of land, good workforce and is increasingly connected to the Bay Area. Our $3B 2,000 acre Mid-California International Trade District (www.midcalitd.com) and the California AutoTech Development Complex in Merced County has established the Valley as a viable place for large-scale manufacturing and distribution. For the CATDC, we have Google/Waymo onsite with their globally known 100 acre test city for their autonomous vehicle program and the shared use AV and autotech facility is being used by a range of OEM’s, established tech suppliers and start-ups.
The site is being developed as a quadra-modal asset with highly developed road, rail, air and ocean connectivity. A new $200M road is underway to the site and it’s on both the transcontinental BNSF and UP rail lines. The site itself has an active tower-controlled airport in the middle of the site – allowing even the largest aircraft in the world to land and take-off there. And the MCITD’s newly announced partnership with the Port of Los Angeles has established that the Valley is directly connected with the largest seaport in North America. This is the first of its kind inland port in the US. Lastly, Merced County is going to be pulled like a magnet further into the Bay Area orbit by both California High-Speed Rail and the near-term ACE Commuter Train which will connect downtown Merced and the MCITD directly to downtown San Jose, allowing for an easy connection in both directions.
Big things are expected over the next few years in Merced and the Central Valley, we are very bullish on the future for “tomorrow’s California”.