The Comeback of the Mega Distribution Center

Demand for the largest warehouses in the U.S. is rising again after several years of slower leasing. Companies signed 146 leases for warehouses larger than 500,000 square feet last year, a jump of more than 30 percent from the year before, according to data cited in a recent logistics report. Tenants, including logistics firms, manufacturers, and companies tied to the data center supply chain, are once again looking for massive distribution facilities after a period when many occupiers paused expansion.

The rebound follows a sharp cooling in the industrial real estate market after the pandemic-era boom. Between 2022 and 2024, developers delivered an enormous wave of new warehouse space, which pushed vacancy rates higher and made tenants more cautious about signing new leases. Some companies also spent several years working through excess inventory that had been stockpiled during supply chain disruptions. As that inventory has normalized and construction activity has slowed, demand is beginning to catch up with supply again...

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RSK: This just goes to show that industrial demand moves rather quickly.