Industrial Users Leased More Huge Warehouses in This Year’s First Half, Aided by Lower Lease Rates and Higher Vacancy

BOSTON–Leasing of megawarehouses of 1 million sq. ft. or larger increased in the first half of this year as a wave of new construction completions led to a decline in lease rates for the category, according to a new report from CBRE.

Industrial occupiers signed leases for 31 megawarehouses in the U.S. in the first half, a 35% increase from the 23 recorded in last year’s first half. Meanwhile, new supply in the 1 million-sq.-ft.-plus category contributed to first-year taking rents declining by 2.2% from 2023 levels. In contrast, lease rates for all sizes of warehouses increased by 7.7% in that timeframe.

CBRE outlines the megawarehouse-leasing trends in its analysis of the largest 100 industrial & logistics leases of this year’s first half. The average size of leases in the largest 100 increased to 814,000 sq. ft. from 791,000 sq. ft. a year earlier.

Claiming the largest shares of the 100 leases were traditional retailers and wholesalers with 30, followed by third-party logistics providers (29), e-commerce operators (14) and food & beverage companies (13). Third-party logistics providers, or 3PLs, handle clients’ warehouse and shipping operations on an outsourced basis.

“The largest 100 industrial leases got even larger in the first half,” said John Morris, CBRE President of Americas Industrial & Logistics. “The uptick in leases of 1 million-sq.-ft. warehouses, in particular, indicates that the market is starting to absorb excess supply.”

Much of the warehouse construction completed this year was started months or years ago, when market conditions were different.

On the market level, California’s Inland Empire once again accounted for the largest number of the top 100 leases in the first half, followed by Memphis and Dallas-/Fort Worth.

Markets With Largest Share of Top 100 Industrial Leases of First Half of 2024