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These US Markets Face a Shortage of Mega-Warehouse Space

Posted By: CoStar on February 26, 2024.  For more information, please click here to read the source article.

Signature Associates’ Joe Hamway and Greg Hudas are proud to be the leasing team for Eastland Commerce Center mentioned in this article.  Contact them for leasing details.


The industrial building boom that began in 2020, spurred by a surge in e-commerce distribution leases and rock-bottom interest rates at the time, has reached historic proportions. But it hasn’t saturated every U.S. market.

In 2022 and 2023, the stock of U.S. industrial property grew by 1.3 billion square feet, equivalent to the size of 22,600 football fields, or all the industrial properties in metropolitan Chicago combined. This marked the most rapid growth recorded for any U.S. commercial property type in a 24-month period in more than 30 years.

With developers focused on building the biggest projects they can, availability rates within existing and under-construction logistics properties measuring 500,000 square feet or larger have surged nationally and rose above 20% in key markets including Indianapolis, Philadelphia, Phoenix and Savannah, Georgia, and Orlando, Florida.

However, there are still a handful of U.S. distribution hubs, including Detroit, Jacksonville in Florida, and Reno, Nevada, where tenants looking for mega-warehouse space defined as larger than 500,000 square feet have very few options. The recent nationwide pullback in industrial construction starts suggests these shortages could persist beyond 2024.


The majority of industrial buildings larger than 500,000 square feet in Detroit are manufacturing facilities operated by major automakers or their suppliers. But thanks in part to metropolitan Detroit’s population of more than 4.4 million residents, the region is also home to over 41 million square feet of mega-warehouse properties.

This cohort of properties has increased by 36% or 10.7 million square feet in the past three years as several companies including Amazon, FedEx and RGL Logistics have opened new distribution centers spanning more than half a million square feet in the region.

While Amazon has at least nine distribution facilities in local properties within this size range, none of these locations have been listed for sublease even as the e-commerce firm has been busy adjusting its warehouse footprint across the U.S. since 2022.

Higher short-term interest rates have also hampered the new construction of big box distribution centers.

Across the entire Detroit metropolitan area, only a single modern distribution center with a contiguous space larger than 500,000 square feet is available for lease, Building 2 within NorthPoint Development‘s Eastland Commerce Center, which recently completed construction near I-94 in Harper Woods.


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