5 Bets On Where The Next US Warehousing Hot Spot Will Be

Warehouses? More like where-houses, ammiright?

The US is experiencing a huge warehouse shortage as retailers hoard industrial storage spaces, sometimes 50% bigger than they need.

In Q4 2021, the national vacancy rate for warehouses fell to 3.2%, per CBRE Group. Almost a year later, vacancy rates are still remarkably low.

In coveted Southern California, for example, these vacancy rates sit below 1%, per Melinda McLaughlin, SVP and global head of research at Prologis.

This isn’t super surprising. 2021 was a record-breaker with 1B+ square feet of industrial leasing activity in the US, James Breeze, CBRE’s global head of industrial and logistics research, told Retail Brew. 2022 is positioned to be a close second.

In response, industrial storage construction and construction schedules have doubled in the past year. But even so, there’s no fear of oversupply, James added.

This has retailers placing bets on where the next US fulfillment hot spot will be.

Here’s what we know for sure: This hub needs to be close to a port (rail or sea), have a growing population, or be in an area where manufacturing is increasing. And ideally, the real estate there will be cheap.

Based on those requirements, we’re left with a few top contenders:

• Dallas/Fort Worth, Texas
• Savannah, Georgia
• Phoenix, Arizona
• Las Vegas, Nevada
• Pennsylvania’s I-78/81 corridor

All that said, Long Beach, California and Newark, New Jersey are the long-standing top warehouse hubs in the US. And that isn’t likely to change anytime soon. So, this new hot spot wouldn’t replace these long-standers; it’d be in addition.