Spurred on by the desire of consumers to receive their orders faster and cheaper, retailers are establishing “intermediate” distribution facilities closer to major population centers. These warehouses are positioned between the big-box import distribution centers and the customers.
“It sounds counter-intuitive, but you’re adding buildings to create greater efficiency,” said David Egan, head of industrial and logistics research in the Americas at CBRE.
CBRE recently released its annual report on inland port logistics in which it cited 12 inland hubs across the country that are expanding their base of industrial properties at nearly twice the national rate.
Inland ports are well-established distribution hubs, usually located near major population centers, that are served by excellent intermodal rail and highway infrastructure. CBRE listed the 12 fastest-growing inland hubs as the Inland Empire (which is about 50 miles east of Los Angeles-Long Beach); Phoenix; Dallas/Fort Worth; Kansas City; Houston; St. Louis; Chicago; Memphis; Columbus, Ohio; Atlanta; Greenville, South Carolina and East and Central Pennsylvania.
Those 12 hubs collectively in the first quarter of 2016 expanded their base of industrial properties by 2.7 percent, compared with the 1.6 percent national average, according to the CBRE analysis. .
Each of the 12 fastest-growing inland hubs has its own attributes as well. Chicago is the biggest and best-located of the bunch. It is the largest point of origin and termination for rail-to-truck intermodal shipments in the country.
St. Louis adds a new factor to the equation with its port district offering access to cost-efficient barge transportation. Although barge transport so far has involved mostly bulk commodities, there is active interest in container-on-barge service that could handle merchandise that moves redundantly, and the shipment date can be planned well in advance to compensate for the longer transit by water, Egan said.
The South Carolina Inland Port in Greer has made the nearby city of Greenville an “up and comer,” CBRE said, based primarily upon the manufacturing enterprises that were attracted to the location because of its proximity to the Port of Charleston. Egan said manufacturing is being supplemented now by distribution activities. Although Atlanta is and will remain the main distribution center for the Southeast, Greenville offers an alternative distribution hub for the region, he said.
With e-commerce driving more decisions now, inland ports are growing in importance and for the foreseeable future will most likely continue to be the fastest-growing sector in industrial real estate, Egan said. “These markets are disproportionately benefiting from the current cycle,” he added.
Story from Joc.com