Using information provided by CRE data and listing platform CommercialEdge, we analyzed how industrial real estate has transformed in the last 10 years — between 2012 and 2021 — a period when e-commerce was becoming an increasingly important factor in the global economy. Specifically, we looked at 30 major industrial real estate markets, analyzing how deliveries and sales volumes in these markets had progressed throughout the last 10 years.
Phoenix made the top 30 for most industrial space completed between 2012 and 2021 at No. 6, adding 72.7 million square feet of space in that timeframe. In 2021, sales volume in the metro reached almost $4.2 billion, more than double compared to 2020.
READ ALSO: Phoenix industrial market sets all-time records in 2021
Industrial Development Accelerates as 30 Markets Add 1.6B SF of New Space Since 2012
In the last 10 years, industrial development was primarily concentrated in transportation nodes and port markets. This fact was immediately evident through the four markets to add more than 100 million square feet of industrial space since 2012: Dallas-Fort Worth, a major transport hub with one of the busiest airports in the country; Inland Empire, an essential logistical corridor for the Port of Los Angeles; Chicago, a major logistical and manufacturing hub; and Houston, a major U.S. port with a significant increase in activity throughout the last decade.
The total amount of industrial space added in all 30 markets throughout the last 10 years added up to 1.6 billion square feet, with nearly half (750 million) coming from the five largest markets. However, the acceleration of industrial development alongside the ascension of e-commerce is even more evident when analyzing industrial development per year in each respective market.
Top Markets: Industrial Real Estate Development in DFW & Chicago Picks Up Steam in Recent Years
Notably, all 30 markets across the five regions analyzed in our study recorded steady increases in delivered industrial space per year. In fact, in 25 of the markets, the amount of industrial real estate delivered in 2021 was more than double the figure from 2012, with some markets even seeing increases of as much as tenfold in that time.
In recent years, this acceleration in development was primarily driven by the growth of ecommerce. And, this was only strengthened by the pandemic, with online retailers registering record sales in 2020 — up more than 45% compared to the previous year, according to Forbes.
The interactive graph below displays industrial space added in the five largest industrial markets in the last 10 years. Click on a market’s name to add or remove it from the graph.
After experiencing considerable fluctuations in industrial space completions between 2012 and 2017, Dallas stood out as the market that delivered the most industrial space in 2021 — a title it also earned in 2018 and 2019. The 24.03 million square feet of Dallas industrial space delivered in 2021 placed it just ahead of Chicago, while also contributing to Dallas’ whopping 208 million total square feet delivered between 2012 and 2021. The market’s elevated demand — and the fact that 2021 industrial deliveries totaled nearly four times the amount from 2012 — can be attributed to its status as a rising high-tech manufacturing center, in addition to it being an established logistics hub and one of the busiest airports in the world.
Not far behind, the market to deliver the second-most industrial real estate in 2021 was Chicago with 24 million square feet. This figure represents an eight-fold increase compared to its 2012 numbers. Notably, the Windy City also earned the top spot in deliveries in 2017, outpacing Dallas. The consistent increase in demand for new industrial space in Chicago can be primarily attributed to build-to-suit projects, as the metro solidified its status as the Midwest’s prime logistical, manufacturing and R&D hub.
At the same time, Houston’s deliveries increased at a slower rate between 2012 and 2018, before picking up steam in the following years and reaching a market-level high of 19.3 million square feet in 2020. And, although deliveries decreased in 2021, Houston still had the third-most new industrial space last year (17 million square feet) to stay ahead of markets like Philadelphia, Denver and Inland Empire. Plus, Houston’s importance as an industrial market and transportation hub increased as online retailers rushed to acquire Houston industrial properties in the form of fulfilment and distribution centers amid a growing number of orders and supply chain issues.
Southwest Sees Dallas Development Outpace Houston; Phoenix & Denver Record Major Expansion
Specifically, despite industrial development in Houston coming in ahead in 2012, 2013 and 2015, Dallas development picked up speed and pulled ahead in more recent years. Even so, the total industrial space added to the Houston industrial market was 119.2 million square feet — the fourth-most among the markets in our study.
Meanwhile, warehouse space in Phoenix and Denver also attracted increased interest: In particular, Phoenix saw a spike in deliveries in 2020, with a total of 14.8 million square feet of industrial space hitting the market that year. Further north, deliveries of new Denver industrial space totaled 12 million square feet in 2021 — more than five times the amount constructed in 2012.
Inland Empire Delivers 178 Million Square Feet of Industrial Space Since 2012, Pulling Ahead of Other Western Markets
However, the market remains central to trade, logistics and manufacturing in the area, and last year’s low may be a fluctuation that’s to be expected following a period of significant growth — especially considering that 28.7 million square feet was delivered here in 2020, more than any other market that year. Moreover, Inland Empire was the epicenter of industrial development on the West Coast with a total of 180 million square feet of space added between 2012 and 2021 — the second-most of all markets studied, only below Dallas.
Aside from Inland Empire, California’s Central Valley market added the most industrial space in the last decade among our selection of markets on the West Coast. Here, 53.1 million square feet was built between 2012 and 2021, including a high of 12.4 million in 2018. However, a slowdown in industrial construction in the Central Valley during the last three years allowed Seattle and Los Angeles to overtake it last year, earning the second and third spots within the region, respectively.
Chicago Solidifies Central Spot in Midwestern Logistics
Granted, Indy did experience considerable fluctuations in industrial deliveries, with dips in 2013, 2016 and 2019. Nevertheless, 8.3 million square feet of Indianapolis industrial space was delivered in 2020 and a further 11 million was completed in 2021, putting the metro ahead of all other industrial markets in the region, besides Chicago.
The next-highest Midwestern markets by industrial deliveries in 2021 were: Columbus, Ohio (10.2 million square feet); Detroit (7.8 million); and Kansas City, Mo. (7.6 million). What’s more, each of these markets also recorded considerable increases in yearly deliveries compared to their 2012 figures — 550,000 square feet of additional industrial space in Columbus; 880,000 in Detroit; and 2.4 million in the Kansas City industrial market.
In the table below, select a year from the drop-down list to see how much industrial space was delivered in each market that year.
E-Commerce Redefines Large Industrial Development as Fulfilment Centers Take Over Top Completions
In addition to rising industrial development in transportation hubs, the influence of e-commerce on the industrial market can also be seen in the type and size of the largest properties that were completed each year.
Select a tab in the table below to see the top five largest industrial properties to be completed each year and read more about them:
Most of the largest completions between 2012 and 2021 were distribution and logistical centers, with online retailers becoming increasingly prevalent in the top five lists as the years went on. Even so, manufacturing facilities made occasional appearances, as well as data centers — which also grew alongside the tech giants operating them.
As a result of the acceleration of e-commerce and tech, the newly-developed industrial properties progressively ballooned in size. For instance, while the largest industrial completions hovered around the 1-million-square-foot mark in the earlier part of the decade, new properties gradually surpassed 2 million and then 3 million square feet in recent years.
Online retail giant Amazon was the sole tenant of an increasing number of the largest industrial properties to open their doors each year, including all five of the largest properties completed in 2021.
The influence of online retail on industrial real estate was evident not only in the size of delivered properties, but also in their roles. Fulfilment and distribution centers gradually transitioned from fulfilling a local role to becoming regional hubs — and subsequently, their size more than doubled in the last decade. And, with the industry innovation of multi-story warehouses, future industrial properties may be getting even larger.
Industrial Sales Volume Gradually Increases in Most Markets in Last 10 Years, Spiking in Transportation Hubs in 2021
Alongside the increase in supply, industrial property sales also steadily climbed throughout the last 10 years in the 30 markets studied.
Notably, the ports of Los Angeles and Long Beach switched to a 24/7 schedule in October 2021, as waiting times in ports across the globe increased and supply lines became clogged. This event was also evident in the market’s industrial sales volume: After nearly doubling between 2012 and 2020 from $1.85 billion to $3.62 billion (with year-over-year dips in 2013 and 2018), a record-breaking $7.43 billion changed hands in 2021 for Los Angeles industrial properties.
At the same time, Inland Empire experienced a similar hike in sales volume, skyrocketing from $2.26 billion in 2020 to $5 billion in 2021. While prime industrial space as close as possible to the Port of LA is drawing huge price tags, Inland Empire’s robust supply also offered a wider range of companies the opportunity to increase their storage and distribution capabilities during the pandemic. Likewise, after a tepid 2020, Seattle, Orange County and the Central Valley also made comebacks in terms of sales volume in 2021. Alternatively, preliminary data pointed toward a 9.3% drop in sales volume for Portland industrial real estate between 2020 and 2021.
Further east, sales volume figures in Phoenix more than doubled between 2020 and 2021, climbing from $2.07 billion to $4.19 billion. Sales in Denver also reached another peak of $1.75 billion after steadily rising each year since 2012, with the exception of 2015.
Meanwhile, sales volume figures in the last 10 years in Houston and Dallas were subject to more volatility: Houston sales volume increased for two years in a row in 2020 and 2021 after dropping the two previous years. And, in Dallas, industrial sales reached a 10-year high of $1.76 billion in 2020 before dropping below the $1 billion mark once again last year (although that amount may increase once more data on last year’s sales is compiled).
In the Midwest, Chicago consistently saw the largest sales volume in the region every year for the last decade — except in 2015, when a wave of sales in Columbus, Ohio, brought the market’s sales volume up to $3.57 billion. That regional record was only surpassed last year by Chicago with a sales volume of $5.1 billion.
Other Midwestern industrial markets also saw steady growth in sales volume throughout the last 10 years, though at a more tempered pace. Specifically, Cincinnati and Indianapolis logged market-level record highs in 2019, with sales later dropping in the two years since. Minneapolis industrial real estate sales volume broke the $1 billion mark for the first time last year, just behind Columbus at $1.24 billion.
Southeastern industrial properties also netted increasingly larger sums since 2012, with Atlanta first breaking the $1 billion mark in 2014 and reaching $3.2 billion last year. Tampa sales volume similarly spiked in 2021 to $1.88 billion after a drop in the previous year, as industrial space in port markets increased in demand due to global supply issues.
And, while new supply in New Jersey slowed in comparison to competing Northeastern markets, sales volumes here were the highest in the region every year except 2020, when it was overtaken by Boston. In Boston, sales kept steady around $2.2 billion in 2020 and 2021, after consistent growth from 2012’s $243 million. Other markets witnessing considerable spikes in sales last year included Philadelphia — up from $900 million in 2020 to $2 billion in 2021 — and Washington, D.C., which broke the $1 billion mark in industrial sales for the first time last year.
The last 10 years were a push toward efficiency and centralization for industrial real estate due to the huge increase in the number of parcels to be delivered, as well as other factors, such as the growing popularity of same-day delivery. Consequently, increasingly larger and more abundant properties have claimed greater roles in manufacturing and logistics within their region. In turn, industrial sales volume in key markets also increased as companies realized the importance of streamlining logistics.
