Jamil Harkness is a Senior Industrial Analyst at CBRE.
Camp development on the west coast is at its highest level in decades. A new report from CBRE shows that there are currently 57.7 million square feet of warehouse development in eight top markets on the west coast. Activity accounts for 40% of total inventory development among the country's top 20 industrial markets. E-commerce – including retailers, wholesalers and third-party logistics companies – is driving increased demand for warehouse space.
"Many markets on the west coast are near a deep water port and a gigantic population base with consumers buying many products, resulting in a deep and diverse business economy." Kurt Strasmann, Executive Managing Director at CBRE, told GlobeSt.com. “As a result, the West Coast markets, particularly the Inland Empire, have become the leading development company in the country. In addition, most of these west coast regions have never been overbuilt, making the vacancy rate among the lowest in the country. "
The Inland Empire is the most active development center on the west coast, accounting for 34% of total warehouse development. It is also the top bearing construction market in the United States. Los Angeles, Las Vegas, the San Francisco Bay Area, Salt Lake City, and Seattle are the other top markets for warehouse construction on the West Coast.
Most of these development activities are speculative. "Almost 75% of current developments on the West Coast are speculative as developers trust the level of demand in all markets." Jamil Harkness Senior Industrial Analyst at CBRE, says GlobeSt.com. "Both the technical data and the custom-made products were exceptionally strong, and we assume that this will remain the case for the foreseeable future for the next 12 to 18 months."
While warehouse development is primarily intended for logistical purposes, cold storage has also become a major driver of development. "Most of the total development has been in warehouse and logistics products, as e-commerce has emerged in the last 10 years," says Harkness. “Now cold storage is the most important thing in order to further increase demand and development in the warehouse. Big Box has dominated, but now we are seeing the emergence of light industry in key filling markets for last mile / parcel delivery purposes. In markets such as Seattle, LA, and the San Francisco Bay Area, the light industry continues to evolve due to the demand for users looking for high quality, last mile light industrial equipment. In comparison, production plants only make up a small part of development activity. "