Number of 1 million-square-foot warehouses at record level

The Lehigh Valley isn’t just getting more warehouses. The warehouses are also getting bigger. 

CBRE just released its latest 100 largest industrial & logistics leases report. This year there were 37 leases of properties over 1 million square feet, up from 24 in 2021. 

 Four of those properties were in the Lehigh Valley. 

“Our region, the I-78/I-81 corridor, is in the top 10 for the largest leases across the country, and this is the seventh year in a row,” said Vince Ranalli, executive  vice president of CBRE. “It’s a great run that we’ve had.” 

He said the boom in the construction of large warehousing space is significant and ongoing. 

He noted that the number of warehouses larger than 1 million square feet grew by 35% over 2021, and that was a record year. 

“We’re on pace for another really strong year next year,” he added. 

The number of large warehouses isn’t just increasing, the overall size of the buildings is also on the rise. 

Building size is up 14% over 2021. 

“The buildings just keep getting larger,” Ranalli said. 

The larger buildings are being leased mostly by the retail, food and beverage and third-party logistics industries. 

“They’re telling us that they’re extremely focused on having adequate inventory on hand,” he said. “We call it ‘just in case’ or ‘safety stock.’ They’re trying to prevent the supply chain issues [of the recent past.] Their warehouses are full to hold all this inventory.” 

He said the demand to keep inventory in stock close to major population centers is going to continue to drive the market for large warehousing space in the Lehigh Valley. 

And while there has been talk about a small recession looming on the horizon with higher interest rates and a tight labor market, Ranalli said he doesn’t expect that to kill the momentum of construction in the warehousing and logistics space as these companies continue to seek to update and modernize their supply chain. 

“The industrial & logistics market preformed solidly in the first half of the year despite headwinds challenging the broader economy,” said John Morris, CBRE’s president of Industrial & Logistics in the Americas. “We have seen a falloff in leasing by smaller users – those in 25,000 square feet or less – likely due to the economic environment. But the largest users are forging ahead, picking up most of the slack.”