Slowing demand for industrial and logistics warehousing space resulted in fewer industrial mega-leases of 1 million square feet or more in 2023, according to a report released Friday by CBRE Group Inc. (NYSE: CBRE), a real estate services firm.
The number of big-box warehouse lease signings fell to 43 in 2023 from a record 63 in 2022, as economic uncertainty and changing inventory management practices weighed on demand for mega-facilities, according to CBRE data.
Traditional retailers and wholesalers — which had been leasing industrial space at a rapid clip — signed 30 of the largest 100 leases last year, down from 53 the year prior. Still, this category represented the largest number of top leases, according to CBRE data.
Meanwhile, 3PLs responded to continued e-commerce growth by signing 29 of the top 100 leases in 2023, up from 11 in 2022, CBRE said.
“Throughout the pandemic and shortly thereafter, many occupiers were forced to shift from a ‘just-in-time’ to a ‘just-in-case’ inventory management approach. This helped boost demand for warehouse space,” said John Morris, president of Americas Industrial & Logistics for CBRE.
Demand remains historically strong, Morris said. “However, we do not expect as many mega industrial leases in the near and mid-term as we saw in 2022,” he said.
Top markets for mega-leases included the Interstates 78 and 81 corridor in central Pennsylvania, California’s Inland Empire, Chicago, Dallas-Fort Worth, Memphis, Tennessee, and Savannah, Georgia. The I-78/I-81 corridor posted the most mega-facility leases in 2023 with 17.