US warehouses are costly and hard to come by, as e-commerce demand picks up

Key Points
  • Nationwide, the industrial vacancy rate is 5.3 percent, a 17-year low, according to's data hub.
  • E-commerce fulfillment is a big reason why the demand for warehouses and distribution centers has increased of late, Jones Lang LaSalle says.
  • E-commerce represents about 40 percent of the leasing of industrial properties today, JLL has found.
An employee arranges flat screen television inventory at the ABT warehouse in Glenview, Illinois.
Tim Boyle | Bloomberg | Getty Images

Companies hoping to secure more warehouse and distribution space are going to run into steeper prices, with fewer options to pick from, in the future, industry website reported Tuesday.

According to the website's data hub, national vacancy rates for shippers in the first quarter of 2017 bottomed at a 17-year low, with average rental rates climbing up 10 percent from a year ago in popular coastal markets.

Nationwide, the industrial vacancy rate is 5.3 percent, and industrial rents are up 8.2 percent this year, after increasing 8.7 percent in 2016, said.

Industrial real-estate rates near three large U.S. ports — those located near Los Angeles, New York and New Jersey — jumped at least 10 percent year-over-year, the shipping and logistics news site said.

"There's simply little to no industrial product available," commercial real estate firm Jones Lang LaSalle, or JLL, wrote in a recent report on the U.S. industrial sector. "The market is on fire today for industrial property owners."

With many traditionally brick-and-mortar retailers closing stores as shoppers' foot traffic softens, construction of new industrial properties is accelerating, JLL has found.

The so-called bricks to clicks trend is clearly accelerating, but these companies still need real estate — warehouses and distribution centers — as evidenced by falling vacancy rates of the larger properties where inventory can be stored and online orders fulfilled.

The construction pipeline for these spaces, although full, might not be full enough to meet such a rapidly growing demand.

Much of the demand is stemming from e-commerce players, according to JLL, which has predicted e-commerce represents about 40 percent of the leasing of industrial properties to date.

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