There are about 6000 North American DCs Larger than 200,000 Square Feet

What defines a “big box” distribution center, and what are the key trends in the North American warehouse market?

Supply Chain Digest Says... Colliers says demand for buildings greater than 750,000 square feet was more than the supply, holding down the growth in absorption in many markets. What do you say? Click here to send us your comments Click here to see reader feedback

Early this spring, real estate firm Colliers issued an interesting report that addresed both those topics. The report defined a big box DC as one over 200,000 square feet.

And there are a lot of them in North America – just under 6000 at the end of 2021, according to Colliers’ research.

Of that total, there were just over 4000 DCs between 200,000 and 499,000 square feet. And as a proof point in the state of supply and demand in the distribution center market, just 127 of those approximately 4000 building were empty at the end of the year.

There were also just over 1000 sites between 500,000 and 749,000 square feet (only 41 fully vacant), and about 900 DCs 750,000 square feet or larger, with only 31 fully vacant.

More than 270 million square feet of occupancy gains were recorded in the big box market in 2021, a new year-end record, Colliers says – but much of that was the result of space additions by Amazon.

Amazon completed 179 transactions for big box space in 2021 to occupy an additional 88.7 million square feet across North America – the equivalent of 87 million square foot DCs.

Below is a chart from the report summarizing market activity by year from 2011 through 2021:

Source: Colliers

In terms of growth in big box space by market, four saw occupancy gains greater than 30 million square feet in 2021: Southern New Jersey/Eastern Pennsylvania (44.5 million square feet), Chicago (33.5 million square feet), Dallas-Fort Worth (31.7 million square feet) and Atlanta (30.4 million square feet).

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The Inland Empire near Los Angeles probably would have also made that list, but lacked enough available space to meet demand.

“Net absorption” of DC space – calculated as new space gains versus any losses in occupancy – was strong in nearly all markets tracked by Colliers, with only Northern-Central New Jersey and Phoenix seeing net occupancy declines.

Colliers says demand for buildings greater than 750,000 square feet was more than the supply, holding down the growth in absorption in many markets.

And Colliers expects these market conditions to continue, saying that “the big-box outlook for 2022 remains positive as the US industrial market continued to set multiple records in 2021 for occupancy gains, new supply and rent growth, which will keep bulk warehouse/distribution space in high demand by ecommerce retailers and manufacturers alike for many quarters to come.”

In fact, at the end of 2021, space under construction totaled 297.7 million square feet, way up from 182 million at the end of 2020.

As result in the extreme tightness in distribution center space, Colliers sees a bright future for new DC builds, conversions of other industrial sites to distribution, and multi-story warehouses.

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