Dive Brief:
- Nearly 100 big-box warehouse construction projects totaling approximately 60 million square feet were completed in the last year, breaking national records, according to the National Real Estate Investor.
- The e-commerce sector is the driving force behind demand for the typically 300,000-square-foot-plus spaces, which currently boast a 7.4% vacancy rate.
- A recent Colliers International report found that even though online sales still only make up about 10% of all sales in the U.S., they are growing at a rate of five times more than that of brick-and-mortar locations, leading to a doubling of speculative big-box construction from 2009 to 2015.
Dive Insight:
Amazon, the largest online U.S. retailer, has grown at a rate of 30% annually and has an impressive inventory of warehouse space across the country, but other retailers are also responding to the shift in demand toward e-commerce and investing more in distribution centers, according to Colliers.
In contrast to this good news for the nonresidential commercial sector, Dodge Data & Analytics reported last month that warehouse starts were down 6% from June to July, contributing to a month-over-month decrease in total construction starts. However, other industry reports have been primarily optimistic about this segment of the construction industry.
The Metropolitan Washington Council of Governments reported that the warehouse and data center categories were the only commercial construction segments to increase in 2015. The Associated Builders and Contractors brought more good news in June when the organization reported that e-commerce was the driver behind a reported eight-month backlog of construction projects and contributed to an all-time high in the ABC's Construction Backlog Indicator, at 12 months. In addition, real estate company JLL reported a 12.9% year-over-year uptick in industrial construction, due largely to retailers and e-commerce companies that need modern, upgraded warehouses.
