Mar 17, 2018

The Great Warehouse Boom

Amazon is a retail behemoth that just keeps growing. The continued expansion of Amazon’s ecommerce retail services has helped bring about the rise of the modern warehouse. Between 2013 and 2017, developers added about 848 million square feet of warehouse space. This more than doubled the 300 million square feet built over the five previous years.

As warehouse after warehouse is being built to keep up with rising ecommerce demands, the war for prime real estate close to the freeway is being waged. “In the previous model you didn’t need to move things all that quickly,” says David Egan, head of industrial and logistics research at commercial real-estate company CBRE. “In this compressed dynamic, you’ve got to push into cities and places where people live.”

The need for companies to build in prime locations has doubled the price of land. What was formerly a $50,000 piece of property has climbed to over $100,000, according to CBRE Group and researcher CoStar Group.

And price isn’t the only thing that’s increasing. The warehouses themselves have significantly grown in size. The average size of a new warehouse built between 2012-2017 is 143% larger and 3.7 feet higher than the 2002-2007 construction period. 500,000-square-foot warehouses have grown to over a million square feet. On top of that, many new warehouses are being built with multiple stories for even more storage space.

In Jackson County, about 50 miles northeast of Atlanta, residents have experienced the warehouse boom firsthand. Since 2015, over 31 fulfillment centers and distribution depots have either opened or are under development in the area. According to Larry Feinstein, chief executive officer of Hire Dynamics, the labor market was almost at full capacity before the boom. “Amazon came in and sucked up all the labor,” leaving his company scrambling to find employees to fill positions.

For workers, though, fewer hands means higher wages. Forklift drivers can make between $15-17.50 an hour in parts of Georgia. Also, unemployment is at an all time low of 3.3%

The Urban Land Institute’s Emerging Trends Report for 2018 named fulfillment centers and warehouses as their top two picks for sectors with investment potential. It’s looking like the warehouse boom will be here to stay for a long while.

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About the author

Andrew Mosteller
Andrew Mosteller is a freelance writer and regular contributor to Lendio News. His upbringing in an entrepreneurial family nurtured a passion for small business at a young age. Andrew's father, an equity fund manager, taught him the ins and outs of investment financing. Now, Andrew spends his time writing copy for business owners, helping them expand and advertise their unique brands. He's also studying Strategic Communications at the University of Utah. When Andrew's fingers aren't glued to the keyboard, he spends his time reading, podcasting, composing music, and bombing down the ski slopes.

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