- For the first year on record, third-party logistics providers in 2022 leased more big-box warehouse space in North America than any other sector, according to a CBRE report published last week.
- 3PLs accounted for 41% of all lease transactions at traditional warehouses and distribution centers with at least 200,000 square feet in 2022. Retailers and wholesalers, the previous leader, came in second at 31.5% of leasing share.
- Growing demand for 3PL services contributed to a strong year for big-box leasing activity overall. Direct vacancy rates matched 2021's record low of 3.3%, driving a 23% jump in first-year base rents YoY.
3PL industrial leasing activity leapfrogs retail, wholesale
Companies began relying more on 3PLs to mitigate pandemic-related disruptions and demand swings, John Morris, president of CBRE's industrial and logistics business in the Americas, said in a statement. Instead of returning to in-house fulfillment as supply chains normalize, "companies have since realized that 3PLs can play a vital role in their business models, and demand is stronger than ever."
Lowering costs and increasing reliability can also motivate firms to switch to 3PLs. CV Sciences, which makes and sells CBD products, outsourced its warehouse fulfillment operations to "an established 3PL operator" to become more cost efficient while also improving shipping times and customer service, the CBD maker’s CEO Joseph Dowling said in a March earnings call.
The company, which grappled with supply chain issues causing out-of-stocks, has also begun working with manufacturing partners to process CBD Oil inventory.
"All of these initiatives fully embrace our long standing commitment to an asset-light business model that can take advantage of an industry that is maturing, becoming more professional and trustworthy," Dowling said.
Although demand slowed at the end of last year, 3PL and online fulfillment tenants should remain key drivers of activity even if demand continues to cool in 2023, Morris said in comments accompanying CBRE's report. The commercial real estate firm expects leasing activity this year to trail 2021 and 2022, but it will still be the third-largest year on record.
"Occupiers will place greater focus on inventory management and supply-chain resilience this year," Morris said. "This likely will result in demand being driven less by the need for safety stock and more by the need to store inventory closer to the point of sale. Mid-size and big-box facilities should be the beneficiaries, as users expand hub-and-spoke fulfillment models."
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