Cost to lease warehouse and distribution center space in the US - and indeed in many areas of the world - continue to rise rapidly.
Certainly one important factor in those rising rates is the growing cost of land in many markets for developers looking to build distribution centers for a signed client or on "spec."
A recent report from real estate firm CBRE tells the tale, as shown in the graphic below, which tracks land costs and then lease rates in the 10 most active warehouse constrction markets in the US in 2017.
As can be seen, the cost for land for DCs in Northern New Jersey has risen to $1.75 million per acre, up 17% in 2017. In the Inland Empire area near Los Angeles, land costs are up 35% to nearly $1 milion per acre.
Costs in 2017 were up double digits in seven of the top ten markets, and as can be seen the costs for land track pretty closely to the average lease costs in each region. Amazingly, land costs in Atlants are just about one twentieth of those in Northern NJ, still at just $100,000 per acre.
"In 2017, land prices rose sharply for development of warehouses – both "first-mile" and "last-mile" – due to strong demand and a diminishing supply of viable sites," CBRE notes.
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