In what has become a litany since shortly after the start of the pandemic in 2022, demand for warehouse space continues to be on a tear, setting records yet again for the first half of 2022, according to a new report from real estate firm CBRE.

Supply Chain Digest Says... The report also found that currently there is a record 626 million square feet of industrial space under construction – due in part due to the long lead times for many materials that are extending build cycle times. What do you say? Click here to send us your comments to see reader feedback

As an example data point, distributors of various types leased an incredible 37 distribution centers in 1H 2022 that were over 1 million square feet, up from what seemed like a lot at 24 over the first six months of 2021.

In fact, the top 100 lease transactions by size averaged 931,000 square feet in the first half of the year. And interestingly, only 15 of the top 100 deals were leases renewals, meaning the vast majority were net new space.

Traditional retailers/wholesalers were most active, accounting for 40 of the top 100, followed by third-party logistics (3PL) operators with 30, seven of which were for 1 million square feet or more, compared with none in 1H 2021. Ecommerce companies took 12 of the top 100, down from 27 last year, which might be the result primarily of Amazon’s slowdown this year in adding space, after publicly acknowledging earlier in 2022 it was had excess fulfillment center capacity and might sub-lease some of its space.

In terms of activity by markets, it was the usual regions getting most of the new lease activity. Atlanta led all markets with 12 of the top 100, five of which were for 1 million square feet or more, followed by Chicago with 11, and Indianapolis with nine, as seen in the chart below.

Savannah was the top emerging market with seven of the top 100, up from two a year ago, driven no doubt by the growing port there.

CBRE also found that US vacancy rates for industrial space – mostly warehouses – at the end of Q2 was just 2.9% nationally.

Source: CBRE

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That rate was down from 3.4% in Q1, and 3.6% a year ago. The report also found that currently there is a record 626 million square feet of industrial space under construction – due in part due to the long lead times for many materials that are extending build cycle times. Most of that DC build is speculative, CBRE says.

But demand is even higher than this growing supply.

All this is pushing lease rates higher. CBRE says commercial rents are up strong 14.9% versus a year ago – but even more in some markets. For example, rents in the Inland Empire area outside of Los Angeles are up an incredible 72.1% in the past year.

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