HOUSTON – (Realty News Report) – E-commerce is fueling a record-setting boom in the United States warehouse sector, with projects totaling 330 million square feet—about 7,575 acres—currently under construction, according to a new report from Lee & Associates.
This nationwide surge in industrial development is a direct response to consumers shifting to online shopping during the coronavirus pandemic, the year-end industrial study from Lee & Associates, a national commercial real estate firm, concludes.
“Despite damage to the labor market and global economies, companies positioned for e-commerce captured a dramatically larger share of total sales. As a result, exploding online demand has intensified needs in key markets for large distribution centers and last-mile facilities,” the Lee & Associates report states.
Amazon alone accounts for roughly 10 percent of this robust activity. In addition, major retailers such as Target, Walmart and Home Depot have taken sizable facilities, along with hundreds of general merchandisers and home improvement firms leasing space nationwide.
Overall, 203.7 million square feet of industrial space was absorbed in 2020, a 27 percent increase from the prior year. Activity surged at year-end, with a net 99.2 million square feet occupied in the fourth quarter—a record-setting quarter for industrial absorption.
The rise in e-commerce has also increased imports, placing added pressure on U.S. ports.
“Record inbound cargo volumes are straining U.S. ports, and officials across the country are moving ahead with expansion plans,” Lee & Associates noted. “As the year closed, dozens of container ships were anchored off the Los Angeles–Long Beach port complex, waiting weeks for berths as more ships continued to arrive.”
The rollout of COVID-19 vaccines has helped restore confidence in Houston’s market, according to Robert McGee, principal of Lee & Associates – Houston.
“The fourth quarter felt closest to normal since the pandemic began. Deals that had been on hold over the previous two quarters began to finalize,” McGee said. “News of the vaccine and other improving economic signs lifted confidence as 26 million square feet of industrial space was delivered in the market during the year.”
Major Houston industrial leases included Dunavant Distribution taking 784,000 square feet on Red Bluff Road in Pasadena; H-E-B leasing 401,280 square feet at 4501 Blaylock Road; and Amazon leasing 368,467 square feet in the Fallbrook Pines project.
Two Amazon-occupied properties in the Houston area changed hands recently. WSRE CP CLAY Owner LP, an entity affiliated with Walton Street Capital, acquired an 806,000-square-foot Amazon distribution building on Clay Road in Katy near the Grand Parkway. In a separate transaction, Exan Capital, a Miami-based investment firm, purchased a 1 million-square-foot Amazon fulfillment center in Brookshire at 31555 Highway 90. Duke Realty, which developed both buildings, was the seller in the Brookshire deal.
In Texas, one of the nation’s most notable Amazon projects is planned for Pflugerville, near Austin—a proposed multi-story facility expected to total approximately 3.8 million square feet.
At the national level, the Dallas–Fort Worth market leads the country with 32,789,685 square feet of industrial space currently under construction, Lee & Associates reports.
Jan 26, 2021 Realty News Report Copyright 2021
File: Amazon E-commerce Drive Construction Boom
File: Lee & Associates. Amazon E-commerce Drive Construction Boom in industrial space.
Caption: Amazon distribution facility in Brookshire near Houston. Courtesy: JLL